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Glossary



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1.

Bearer Bond

A bond that does not have the owner's name registered on the issuer's books. Interest and principal, when due, are payable to the owner.

2.

Bond

Bonds are promissory notes or IOUs issued by a corporation or government to its lenders. They are usually issued in multiples of $1,000 or $5,000, although $100 and $500 denominations are available. A bond is evidence of a debt on which the issuing company usually promises to pay the bondholder a specified amount of interest at intervals over a specified length of time and to repay the original loan on the expiration date. A bond represents debt; therefore, its holder is a creditor of the corporation and not a part owner, as the stockholder is. The NYSE operates both a bond trading floor and an Automated Bond System (ABS), where listed bonds may be traded.

3.

Corporate Bond

A bond issued by a corporation.

4.

Income Bond

Bonds that promise to repay principal but to pay interest only when it is earned. In some cases, the unpaid interest on an income bond may accumulate as a claim against the corporation when the bond becomes due.

5.

Mortgage Bond

A bond secured by a mortgage on a property. The value of the property may or may not equal the value of the bond issued against it.

6.

Municipal Bond

A bond issued by a county, city, district, or authority.

7.

Registered Bond

A bond that is registered on the books of the issuing company in the owner's name. It can be transferred only when the registered owner endorses it.

8.

Zero Coupon Bond

A bond that pays no interest but is priced, at issue, at a discount from its redemption price.