Investment Funds in Canada (IFIC) -
Chapter 7 well answered to pass
What are fixed-income securities?
They are debt issued by an entity in the financial market and sold to investors. They pay or are expected
to pay a fixed amount of return on a regular basis to investors.
What are the most common types of fixed-income securities?
- Government and corporate bonds
- GICs
- T-bills
- Bankers' acceptances
- Commercial paper
What are the terms of a fixed-income security?
- Promise to repay the maturity value or principal on the maturity date, and
- Promise to pay interest at stated intervals over the life of the security.
Coupons
Regular payments made from the issuer to the holder of the debt are called coupons.
What are the 2 main reasons that corporations and governments borrow money by issuing bonds and
other types of fixed-income securities?
- To finance their operations and fill any shortfalls in cash they are experiencing, and
, - To use the proceeds to finance expansion and growth plans.
Bonds are considered loans that investors make to governments and corporations. The borrower (the
government or corporation) agrees to make regular interest payments (coupon payments) and pay back
the principal or _____ _______ (original amount issued) on the bond's maturity date.
Par value
Almost all bonds promise to make _________coupon payments to the bondholders.
Semi-annual (every 6 months)
Sophie buys an ABC $10,000, 8% semi-annual coupon bond that matures May 1, 2030. When and how
much the bond will pay her every year until maturity?
The bond will pay her $400 every 6 months, on May 1 and November 1 of each year to maturity.
($10,000 x 0.08) / 2 = $400
Bonds can be purchased only in specific denominations. What are the most commonly used
denominations?
- $1,000
- $10,000
After being issued, bonds are bought and sold between investors in the ______________ market at a
stated _________ and a quoted __________.
- Secondary
- Price
- Yield
Chapter 7 well answered to pass
What are fixed-income securities?
They are debt issued by an entity in the financial market and sold to investors. They pay or are expected
to pay a fixed amount of return on a regular basis to investors.
What are the most common types of fixed-income securities?
- Government and corporate bonds
- GICs
- T-bills
- Bankers' acceptances
- Commercial paper
What are the terms of a fixed-income security?
- Promise to repay the maturity value or principal on the maturity date, and
- Promise to pay interest at stated intervals over the life of the security.
Coupons
Regular payments made from the issuer to the holder of the debt are called coupons.
What are the 2 main reasons that corporations and governments borrow money by issuing bonds and
other types of fixed-income securities?
- To finance their operations and fill any shortfalls in cash they are experiencing, and
, - To use the proceeds to finance expansion and growth plans.
Bonds are considered loans that investors make to governments and corporations. The borrower (the
government or corporation) agrees to make regular interest payments (coupon payments) and pay back
the principal or _____ _______ (original amount issued) on the bond's maturity date.
Par value
Almost all bonds promise to make _________coupon payments to the bondholders.
Semi-annual (every 6 months)
Sophie buys an ABC $10,000, 8% semi-annual coupon bond that matures May 1, 2030. When and how
much the bond will pay her every year until maturity?
The bond will pay her $400 every 6 months, on May 1 and November 1 of each year to maturity.
($10,000 x 0.08) / 2 = $400
Bonds can be purchased only in specific denominations. What are the most commonly used
denominations?
- $1,000
- $10,000
After being issued, bonds are bought and sold between investors in the ______________ market at a
stated _________ and a quoted __________.
- Secondary
- Price
- Yield
