Chapter 7 Corporate Finance

Par Value

a bond's stated value, to be paid to the bondholder at maturity

Coupon Intrest Rate

Stated as a percent of par- interest rate paid at a set interval as a percentage of par

Maturity

the time at which payment to a bondholder is due

Call Provision

A right by the issuer to retire the bond before maturity

Sinking fund

A set aside of cash used to retire some outstanding bonds over the term to maturity- a plus for bondholders

Converts, warrants, putable features, income bond, indexed

Various provisions that enable an issuer greater flexibility in securing financing

Yield to Call

is the expected return on a callable bond, assuming the bondholder redeemed the bond on the earliest call date before maturity

Yield to Maturity

the rate of return a bondholder will receive if the bond is held to maturity

Current Yield

Coupon Payment/ Current Bond Price

Capital Gains Yield (CGY)

( Ending Bond Price- Beginning Bond Price )/ Beginning Bond Price

Expected total Return

Current yield + Capital Gains Yield