Finance | Chapter 12 Vocab

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24 Terms

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Debenture Bond

A bond is backed only by the reputation of the issuing corporation, rather than by its assets

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Loaded Fund

A mutual fund in which you pay commission every time you buy or sell shares

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Convertible Bond

A bond that an investor can trade for shares of the corporation’s common stock

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Capital Gain

The profit that results from an increase in value when an investor sells shares in a mutual fund

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Mortage Bond

A bond that is backed by the assets of a corporation

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Face Value

The dollar amount that the bondholder will receive at the bond’s maturity

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Maturity Date

The date when a bond will be repaid

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12b-1 Fees

Helps for marketing and advertising a mutual fund

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General Obligation Bond

A bond that is backed by the full faith & credit of the government that issued it

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Family of Funds

A variety of mutual funds managed by one investment company; Allows investors to adjust their investment conveniently to achieve a different financial objective

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Registered Bonds

A bond regiestered in the owner’s name by the company that issues the bond

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Bearer Bond

A bond that is not registered in the investor’s name

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Yield

The rate of return earned by an investor who holds a bond for a certain period of time

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Open-ended Funds

A mutual fund with an unlimited number of shares that are issued & redeemed by an investment company at the investor’s request

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Net Asset Value (NAV)

The amount that one share of a mutual fund is worth

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Serial Bonds

Bonds issued at the same time but which mature on different dates

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Closed-end Funds

A mutual fund with a fixed number of shares that are issued by an investment company when the fund is first organized

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Coupon Bond

A bond that is registered in the owner’s name for only the face value and not for interest

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Exchanged-traded Fund (ETF)

A fund that invests in stocks or other securities contained in a specific stock or securities index

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Zero-coupon Bond

A bond that does not produce interest payments; Sold well below face value to insure a profit at maturity

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Sinking Fund

A fund to which a corporation makes deposits for the purpose of paying back a bond issue

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Income Dividends

The earrnings a mutual fund pays to shareholders

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Municipal Bonds

Bonds issues by state and local governments to pay for projects

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Investment-grade Bonds

Bonds that are issues by financially stable companies or municipalities