SIE Key Concepts Ch. 3

Bonds

debenture

Unsecured corporate debt backed by the good faith and credit quality of the company

Convertible Bond Pricing

based on the value of the underlying common stock since the investor can exchange the bond for the shares

convertible bond parity price

value at which the investor is mathematically indifferent between owning the bond or converting into the underlying shares

Non-Marketable US Government Securities

includes savings bonds, cannot be traded or resold

Series I bond

non-marketable US Treasury savings bond, pays a combination of fixed and variable interest (linked to the rate of inflation)

New Treasury Securities

sold through a public auction process conducted by the Federal Reserve Board

noncompetitive tender

for new Treasury securities, will ensure an individual’s order is filled

Industrial Development Revenue Bonds

type of taxable municipal security that is issued by a municipality on behalf of a corporation, municipality will issue debt to build a facility on behalf of a corporation and then lease that facility to the corporation, debt’s credit quality tied to corporation

Official Statement

primary disclosure document used in a municipal security offering, includes all relevant information for investors, such as the risks of the bonds (must be provided at or before settlement of transaction to governmental investors of an LGIP)

Commercial paper

unsecured promissory note, issued by corporations at a discount with a typical maximum maturity of 270 days

Banker’s Acceptances

short-term, negotiable money market instrument that is used to finance and facilitate international trade w/ a maturity of 180 days or less, issued by a borrower and guaranteed by a commercial bank

Eurodollar deposit

U.S. Dollars held in a depository (bank) abroad

Eurodollar Bonds

bonds issued outside the United States (e.g., Argentina) but denominated in U.S. dollars, traded outside the US and not registered with the SEC

Negotiable CDs

can be traded on the secondary market and have a minimum face value of $100,000