Match Each of the Following Terms with the Appropriate Definitions

question 196

Multiple Choice

Match each of the following terms with the appropriate definitions.
-The contract between the bond issuer and the bondholder(s) that identifies the rights and obligations of the parties.

• A)Secured bonds
• B)Sinking fund bonds
• C)Carrying value
• D)Serial bonds
• E)Bond indenture
• F)Annuity
• G)Premium on bonds
• H)Contract rate
• I)Debt-to-equity ratio
• J)Callable bonds

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Definitions:

Yield Curve

The curve that results when the yield to maturity is plotted on the y-axis with term to maturity on the x-axis.

Junk Bonds

High-risk, high-yield bonds issued to finance leveraged buyouts, mergers, or troubled companies.

High-Risk

Describes an investment or venture that carries a high level of uncertainty and the potential for significant loss.

Leveraged Buyouts

The acquisition of a company using a significant amount of borrowed money (debt) to meet the purchase cost.