Bond Sinking FundContents A bond sinking fund is a reserve account set aside by a bond issuer, specifically for repaying part or all of the bond issue before or at maturity. This mechanism provides a way for issuers to gradually retire their debt, ensuring that sufficient funds are available to fulfill their repayment obligations, thereby
Bond PremiumContents A bond premium occurs when a bond is sold for more than its face value. This typically happens when the bond’s coupon rate—the interest rate it pays—is higher than the prevailing market interest rates, making it more attractive to investors who are willing to pay extra for the higher income stream. For businesses
Bond IndentureContents A bond indenture is a legal contract between a bond issuer and a bondholder that outlines the specific terms and conditions of the bond issue. It includes details such as the interest rate, maturity date, repayment schedule, covenants, and any other obligations or rights of the issuer and the bondholders. In the business
Bond DiscountContents A bond discount occurs when the market price of a bond is lower than its face value or par value. This situation typically arises when the bond’s coupon rate—the interest rate it pays—is lower than the prevailing market interest rates, making the bond less attractive to investors unless it is sold for less
Bond CovenantContents A bond covenant is a legally binding term or condition included in the agreement between a bond issuer and bondholders. These covenants are designed to protect the interests of both parties, specifying actions the issuer is obligated to perform or prohibited from doing during the term of the bond. Bond covenants play a
Bond CertificateContents A bond certificate is a physical document that represents an investment in a bond, issued by the bond issuer to the bondholder. It includes critical details such as the bond’s par value, interest rate, maturity date, and issuer information, serving as evidence of the bondholder’s investment and the issuer’s obligation to pay back
Bond Call PriceContents A bond call price is the price at which a bond issuer can redeem a bond before its maturity date, as specified in the bond’s terms. This feature allows the issuer to retire the debt early, usually when interest rates have fallen, enabling them to refinance the debt at a lower cost.
Bond Amortization ScheduleContents A bond amortization schedule is a table that outlines the gradual reduction of the cost of a bond in accounting over its life until it reaches its face value at maturity. This schedule details each payment throughout the life of the bond, breaking down the amounts allocated to interest and the principal
Board of DirectorsContents A board of directors is a group of elected individuals who represent shareholders’ interests, overseeing the management and governance of a corporation or organization. This body makes key decisions on policy, strategy, and financial management, ensuring the company’s prosperity while meeting the interests of its stakeholders. In the business world, the board
Board Designated RestrictionContents A board designated restriction refers to limitations or earmarks placed on certain funds or assets by an organization’s board of directors, dictating their use for specific purposes. Unlike restrictions imposed by donors or external parties, these restrictions are internally decided, allowing organizations, particularly non-profits, to allocate resources strategically towards certain projects, initiatives,