List the Conditions Necessary for the Use of Individual Incentives

question 144

Essay

List the conditions necessary for the use of individual incentives.

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Definitions:

Call Provision

Gives the issuing corporation the right to call the bonds for redemption. The call provision generally states that if the bonds are called, the company must pay the bondholders an amount greater than the par value, a call premium. Most bonds contain a call provision.

Bondholders

Investors or entities that hold bonds issued by corporations or governments, entitled to receive the bond's face value and interest payments.

Principal Amount

The principal amount is the original sum of money borrowed in a loan or the initial amount invested, excluding any interest or profits.

Floating-Rate Bonds

Bonds whose coupon payment may vary over time. The coupon rate is usually linked to the rate on some other security, such as a government bond, or to some other rate, such as the prime rate or LIBOR.