Finance | Chapter 12 Vocab

Debenture Bond

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

Loaded Fund

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

Convertible Bond

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

Capital Gain

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

Mortage Bond

A bond that is backed by the assets of a corporation

Face Value

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

Maturity Date

The date when a bond will be repaid

12b-1 Fees

Helps for marketing and advertising a mutual fund

General Obligation Bond

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

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

Registered Bonds

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

Bearer Bond

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

Yield

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

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

Net Asset Value (NAV)

The amount that one share of a mutual fund is worth

Serial Bonds

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

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

Coupon Bond

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

Exchanged-traded Fund (ETF)

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

Zero-coupon Bond

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

Sinking Fund

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

Income Dividends

The earrnings a mutual fund pays to shareholders

Municipal Bonds

Bonds issues by state and local governments to pay for projects

Investment-grade Bonds

Bonds that are issues by financially stable companies or municipalities