report finance

1. Bonds- in finance an official document in
which a government or company promises
to pay back an amount of money that it has
borrowed and to pay interest to borrowed
money.

2. Bonds: As Differentiated from
Stocks
• Bonds is an instrument of debt, while stock is an
instrument of ownership in business;
• Bondholders are given priority in payment of obligations,
over the stockholders;
• Bonds interest are fixed, while dividends to stockholders
vary with the income of and those declared by the board
of directors;
• Bonds have maturity date to pay principal or interest,
while stocks, as capital financing, do not have maturity
dates;
• Bondholders have no voting right nor influence in the
management of the company, except if there are
provisions in the indenture agreement, while common
stocks have voting right.

3. • Coupon rate- New bonds rate
normally fixed and set equal to
market interest rates on bonds of
comparable quality and maturity so
that

4. • Maturity- Typically maturity on long-term debt is
about 20 to 30 years. On the other end of the
scale, companies in need of financing often are
willing to borrow for as few as 10 years,
especially if they feel that interest rates are
temporarily high.

5. • Call features and bond refunding- An optional
retirement provision that permits the issuing
company to redeem, or call, a debt issue prior to
its maturity date at a specified price. Many firms
use the call feature because it provides them with
the potential flexibility to retire debt prior to
maturity if, for example, the interest rates decline
and the issuer wants to refinance at the lower
rates.
• Put features-An option that entitles the
bondholder to sell the bond back (put back) to the
issuer before maturity at a predefined price, and
reinvest the proceeds in new bonds with higher
coupon rates.

6. • Sinking fund- The method of providing for
a gradual retirement of bond issues, in
which a certain amount is put aside
annually, or "sunk" into account.
• Equity -linked debt. A conversation ratio
is determined, which refers to the
number of shares into which a
convertible bond can be converted.

7. Indenture- a document or a section a
document that is indented.
This is a contract between the
corporation and the trustee on behalf
of the bondholders. The indenture
contains the terms of the bond issue
covering the obligations of the
corporations, the manner of its
fulfillment, the rights and
responsibilities of the bondholders,
and the duties of the trustee.

8. Indenture agreements vary from issue to issue, but in general they
are very technical documents. This is because the role of the
indenture is to prescribe every detail of the bond's provisions as
well as the day-to-day management of the bond.
For example, the indenture gives bondholders exact instruction
about whom to contact if the bonds are called and describes the
procedures for tendering their certificates and receiving their
compensation. Other details in a bond indenture include a
description of how the bond certificates will look and what
language will appear on them, as well as a list of financial
covenants the issuer must abide by and the formulas for
calculating whether the issuer is abiding by the covenants.
Since indenture agreements can be very technical, the issuer
usually appoints a trustee (usually a large bank) to act on behalf of
the bondholders in certain situations, including making sure the
issuer is abiding by the covenants, paying interest on time,
collecting and distributing certificates, and so forth.

9. Its contents are:
• The amount, length of time, and denomination of the
bond issue;
• Serial issues and the size of each issue;
• The rate of interest , terms of payment, and the
designated place of collection;
• Rights, pupilage, or limitations attached to the issue;
• Security type and its terms;
• Portage or pledge of securities, if any;
• Manner of redemption;
• Remedies available to bondholders, in case of
bondissuer's default;
• Replacement procedure of mutilated or lost bond
certificate;
• Duties and remunerations of the trustees.

10. A person or organization that has been
given responsibility for managing
someone else's property or money
through a trust.
This is the person or entity who handles
monies or property on behalf of another in
a trust.