Chapter 6

Bond Certificate- States a terms of a bond as well as the amounts and dates of all payments to be made

Maturity Date- The final repayment date of a bond

Term- The Time remaining until the final repayment date of a bond

Face Value/Par Value- The notional amount of a bond used to compute its interest payment. The face value of the bond is generally due at the bonds maturity

Coupons- The promised interest payments of a bond, paid periodically until the maturity date of bond

Coupon Rate- Determines the amount of each coupon payment of a bond. The coupon rate expressed as an APR is set by the issuer and stated on the bond certificate.

Zero-Coupon Bond- A bond that makes only payment at maturity

Treasury Bills- Zero-coupon bonds issued by the U.S. government with a maturity of up to one year

Discount- A price at which trade that is less then their face value

Pure Discount Bonds- Zero-coupon bonds

Yield To Maturity- The rate of return of an investment in a bond is held to its maturity date, or the discount rate that sets the present value of promised bond payment equal to the current market price to the bond

Spot Interest Rates- Default free, zero-coupon yields

Zero Coupon Yield Curve- A plot of the yield of risk-free zero coupon bonds as functions of the bonds maturity date

Coupon Bonds- Bonds that pay regular coupon interest payments up to maturity when the face is also paid

Treasury Bonds- A type of U.S. Treasury coupon security, currently traded in financial markets with original maturities of more than ten years

Premium- A price at which coupon bonds trade that is greater then their face value

Par- A price at which coupon bonds trade that is equal to their face value

Invoice Price- A bonds actual cash price

Clean price- A bonds price cash price less an adjustment for accrued interest, the amount of