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Unit 3 - Debt Securities - 8 Qs - Coggle Diagram
Unit 3 - Debt Securities - 8 Qs
Type of debt
Bonds quote :check:
Nominal/subject quote vs work out
Corporate = eighths (⅛s)
Government = thirty-seconds (¹⁄₃₂)
Percentage of par means 95½ so 95.5% of $1,000
Structure: Indenture,paying agent, princing (quotes), trustee, secured and unsecured, Noncallable
accrued interest :check:
Puttable bonds (protect investor when rates rise)
Callable bonds (protect issuer when rates fall)
dated date
day the bond starts accruing interest. :check:
OID :check:
Trading flat :check:
Duration = sensitivity to IR , link with coupon rate :check:
Money Market Instruments
US T Bill, Commercial Paper (CP), CD, BAs, Repurchase Agreements (Repo), Sovereign debt securities (Eurobond, Eurodollar Bond)
Bond Yields
NY, CY, YTM, YTC
Coupon = Nominal yield
CY = Annual Interest / CMP
premium :check: Discount
Premium → Amortize → Cost basis decreases → Smaller gains/losses :check:
Discount → Accrete → Cost basis rises → Taxable interest or gain
Price/ Yield relationship
callable must be stated :check:
Calculating Yield :check:
Alternative Debt securities
ELNs (Equity Linked Notes)
Private Placement Debt
Foreign Exchange–Linked Notes :check:
Jumbo CD :check:
Auction Rate securities :check:
Auction Rate Municipal Bonds
Auction Rate Preferred Shares (ARPS)
Credit Analysis ratings
Investment grade debt, High Yield Bonds, Money Market Ratings
Documentation
trust indenture / deed of trust :check:
Trust indenture act of 1939 :check:
Terms of the loan, rights and obligations of issuers and bondholders, roles of the trustree
Used for Corporate bonds and Revenue Bonds :check:
System
Trade Reporting and Compliance Engine (TRACE) :check:
Corporate actions
Reducing outstanding debt :check: