Question 5-1 Define each of the following term:
A. Bond; Treasury bond; corporate bond; municipal bond; foreign bond.
B. Par value; maturity date; coupon payment; coupon interest rate.
C. Floating-rate bond; zero coupon bond; original issue discount bond (oid).
D. Call provision; redeemable bond; sinking fund.
E. Convertible bond; warrant; income bond; indexed, or purchasing power, bond.
F. premium bond; discount bond.
G. current yield (on a bond); yield to maturity (YTM); yield to call (YTC).
H. indentures; mortgage bond; debenture; subordinated debenture.
I. development bond; municipal bond insurance; junk bond; investment-grade bond.
J. real risk-free rate of interest, r*; nominal risk-free rate of interest, rRF
K. inflation premium (IP); default risk premium (DRP); liquidity; liquidity premium (LP)
L. interest rate risk; maturity risk premium (MRP); reinvestment rate risk.
M. term structure of interest rates; yield curve.
N. “normal” yield curve; inverted (“abnormal”) yield curve.
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