A bond
7.5a Characteristics of All Debt Instruments
Principal
Maturity date
Current yield/Yield to maturity
Coupon
Indenture
put up to secure the loan. For example, the collateral for a mortgage loan
Default
Why might a limit be set on dividend payments?
There are two influences on the expected return on debt instruments.
Assume a SAR 1,000 fixed-rate bond pays 5% when the inflation rate is 3%. Investors
Another characteristic of all debt is risk. This includes the risk that the
Credit ratings
Credit ratings
FI G U R E 7.4 A discounted bond approaching maturity
7.5b Types of Corporate Bonds
FI G U R E 7.5 continued Types of Corporate Bonds
What does a bond with a floating rate protect against?
Credit ratings for companies are assigned by the Saudi government.
If interest rates increase due to inflation:
Convertible bonds allow the holder the option to exchange the bond with a predetermined number of shares of common stocks.
Which of the following bonds is supported by collateral?