From simple corporate bonds, and government securities to derivatives, credit default swaps, and mortgaged back securities this seminar from Saunders Learning Group covers all of the details of fixed income investing. Contact at us 316-680-6482 or floyd@floydsaunders.com to arrange a seminar today.
This educational infographic offers users a straightforward view into the many strategies that hedge funds utilize to provide portfolio diversification, risk management, and reliable returns to their investors.
Included among the strategies featured in the infographic are:
Long/Short Equity Funds
Global Macro
Event Driven
Relative Value
Credit Funds
Quantitative Funds
Multi-Strategy Funds
Managed Futures (CTAs)
Learn more about the global hedge fund industry at: www.hedgefundfundamentals.com.
This educational infographic offers users a straightforward view into the many strategies that hedge funds utilize to provide portfolio diversification, risk management, and reliable returns to their investors.
Included among the strategies featured in the infographic are:
Long/Short Equity Funds
Global Macro
Event Driven
Relative Value
Credit Funds
Quantitative Funds
Multi-Strategy Funds
Managed Futures (CTAs)
Learn more about the global hedge fund industry at: www.hedgefundfundamentals.com.
A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Derivatives can either be traded over-the-counter (OTC) or on an exchange. OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated, whereas derivatives traded on exchanges are standardized. OTC derivatives generally have greater risk for the counterparty than do standardized derivatives.
Collateral management has moved to the top of the agenda for many institutions as a tool to help mitigate credit risk and manage liquidity. This approach has mainly been driven by regulatory changes such as Basel III, Solvency II and G20 requirements pertaining to the central clearing of over the counter (OTC) derivatives. Basel III will require banks to hold more capital against their uncollateralised exposures, which will force more banks to increase their collateral requirements with clients. In turn, financial institutions will have to find the most efficient way for managing their collateral to manage liquidity as uncollateralised trades will become more expensive due to the CVA requirements.
The Hedge Fund Academy will explore the impact proposed regulatory changes will have on collateral management and liquidity requirements for the whole South African Market. Implementing a collateral management process can be challenging and implementing an insufficient collateral management system and process may even result in much greater losses.
"This presentation covers the fundamentals of the Indian capital markets. It includes a briefing on the various instruments available for fund raising and investing. It will help you understand the basics of shares, debentures, bonds, commodities and other instruments".
So you want to start a business and need funding. Here are more than a dozen ways to finance your new business, from using your own assets all the way to an initial public offering, just like Facebook.
This seminar is intended to introduce potential investors to the value of including dividend growth stocks in their mix of investments. It is a valuable introduction and highlights several stocks with a 15 year (or better) record of increasing dividends. Also covers dividend reinvestment plans and mutual funds that focus on dividend stocks. Contact me if you would like a custom developed seminar. floyd.saunders@yahoo.com
A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Derivatives can either be traded over-the-counter (OTC) or on an exchange. OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated, whereas derivatives traded on exchanges are standardized. OTC derivatives generally have greater risk for the counterparty than do standardized derivatives.
Collateral management has moved to the top of the agenda for many institutions as a tool to help mitigate credit risk and manage liquidity. This approach has mainly been driven by regulatory changes such as Basel III, Solvency II and G20 requirements pertaining to the central clearing of over the counter (OTC) derivatives. Basel III will require banks to hold more capital against their uncollateralised exposures, which will force more banks to increase their collateral requirements with clients. In turn, financial institutions will have to find the most efficient way for managing their collateral to manage liquidity as uncollateralised trades will become more expensive due to the CVA requirements.
The Hedge Fund Academy will explore the impact proposed regulatory changes will have on collateral management and liquidity requirements for the whole South African Market. Implementing a collateral management process can be challenging and implementing an insufficient collateral management system and process may even result in much greater losses.
"This presentation covers the fundamentals of the Indian capital markets. It includes a briefing on the various instruments available for fund raising and investing. It will help you understand the basics of shares, debentures, bonds, commodities and other instruments".
So you want to start a business and need funding. Here are more than a dozen ways to finance your new business, from using your own assets all the way to an initial public offering, just like Facebook.
This seminar is intended to introduce potential investors to the value of including dividend growth stocks in their mix of investments. It is a valuable introduction and highlights several stocks with a 15 year (or better) record of increasing dividends. Also covers dividend reinvestment plans and mutual funds that focus on dividend stocks. Contact me if you would like a custom developed seminar. floyd.saunders@yahoo.com
Everyone wants to be more financially secure, but don't know the basics of how to get there. This presentation is a roadmap with seven simple rules for financial success. It is part of a series of seminars offered by Saunders Learning Group on personal money management. You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
So its the time for you to buy your first home and you need a mortgage. In this seminar learn about all of the options for a mortgage, and how you can qualify for a loan. We will cover all of the details and answer your questions. If you are a professional, this is the perfect seminar to help your customer learn about the mortgage loan process and we can customize it to your needs. Just contact us for details.
This is a overview of the business of banking, including retail, business and investment banking. We have also included introductions to other financial services like credit cards, credit rating agencies, mutual funds and the business processes used to process loan transactions, credit card payments, and a range of other banking services and products. Useful for anyone who would like an overview of the banking industry. Downloads will be allowed for 30 days. After that you can contact me if you would like the file.
Financing Your Future Module 5 of Family Financial Freedom Floyd Saunders
The seminars are available to anyone including financial planners, and other professionals in the financial services industry who would like a set of the materials, participant's workbooks or the Family Financial Freedom book (discounts for volume purchases)You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
THE CLASSIFICATION OF DEBT INSTRUMENTS IN INDIAVARUN KESAVAN
Debt Instruments are obligation of issuer of such instrument as regards certain future cash flow representing Interest & Principal, which the issuer would pay to the legal owner of the Instrument. Types of Debt Instruments are of different types like Bonds, Debentures, Commercial Papers, Certificates of Deposit, Government Securities (G - Secs) etc. The Government Securities (G-Secs) market is the oldest and the largest element of the Indian debt market in terms of market capitalization, trading volumes and outstanding securities. The G-Secs market plays a very important role in the Indian economy as it provides the benchmark for determining the level of interest rates in the country through the yields on the government securities which are treated as the risk-free rate of return in any economy.
The reserve Bank of India has allowed Primary Dealers, Banks and Financial Institutions in India to do transactions in debt instruments among themselves or with non-bank clients. Debt instruments provide fixed return known as coupon rate. Retail investors would have a natural preference for fixed income returns and especially so in the present situation of increasing volatility in the financial markets. Now, retail investors are also showing keen interest in Debt Instruments particularly in the Central Government Securities (G-secs).For an individual investor G-secs are one of the best investment options as there is zero default risk and lower volatility.
Bonds are one of the three main generic asset classes.
Bonds are a long-term liability with a specified amount of interest and specified maturity date. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities.
Bonds, often referred to as fixed-income securities, are debt instruments that allow corporations, municipalities, and governments to raise capital. But how exactly do they work? Let's break it down.
Bonds are a fixed income asset that provide investors with a range of risks and yields. Numerous types of bonds and bond financial instruments exist for investors to choose from. They are often considered a safe-haven asset during times of economic contraction because they and in some cases, provide tax protection.
Bonds tend to have less risk than stocks, but at the cost of less return. However, a proper use of certain kinds of bonds may temper the risk of your overall portfolio using diversification.
Blog post scheduled for 9 Sep 2015
http://wp.me/p2Oizj-CR
16 reasons rich people are better at managing their money and what you can do to change how you think about your money. This presentation is based on the book "The Millionaire Mind". Rich people have perhaps many advantages, but most millionaires are just average people who think about money in different ways that the rest of us.
Investing can be simple, one way is buy a single share of stock and then invest more on a monthly basis, invest the dividends and over time your money will grow.
At ReallySimpleInvesting.com we work every day to bring you personal financial educational materials you can use to increase your financial security. Check us out at: www.reallysimpleinvesting.com
Getting Started with Financial Security Module 1 Floyd Saunders
The seminars are available to anyone including financial planners, and other professionals in the financial services industry who would like a set of the materials, participant's workbooks or the Family Financial Freedom book (discounts for volume purchases)You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
Make Your Money Work Harder Than You Do Module 2 Floyd Saunders
The seminars are available to anyone including financial planners, and other professionals in the financial services industry who would like a set of the materials, participant's workbooks or the Family Financial Freedom book (discounts for volume purchases)You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
Securing Your Financial Base Module 4 of Family Financial Freedom Floyd Saunders
The seminars are available to anyone including financial planners, and other professionals in the financial services industry who would like a set of the materials, participant's workbooks or the Family Financial Freedom book (discounts for volume purchases)You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
Investing in Real Estate Module 7 of Family Financial Freedom Floyd Saunders
he seminars are available to anyone including financial planners, and other professionals in the financial services industry who would like a set of the materials, participant's workbooks or the Family Financial Freedom book (discounts for volume purchases)You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
Evaluating Your Investments Module 8 of Family Financial Freedom Floyd Saunders
The seminars are available to anyone including financial planners, and other professionals in the financial services industry who would like a set of the materials, participant's workbooks or the Family Financial Freedom book (discounts for volume purchases)You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
Passing Your Wealth On - Module 10 of Family Financial Freedom Floyd Saunders
The seminars are available to anyone including financial planners, and other professionals in the financial services industry who would like a set of the materials, participant's workbooks or the Family Financial Freedom book (discounts for volume purchases). You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
College is expensive, no doubt about it. But you can make it more affordable following the tips and ideas in this, the fifth module of the Affording College Now workshop. Based on materials from the book, "College Without Ramen Noodles".
A workshop leader's guide is available, just contact us.
So you want to go to college! But college is expensive, what to do? For most students financial aid is a part of the package to make college affordable. In this module of the Affording College Now Seminar, we cover all of the sources of financial aid. A Leader's Guide is available if you would like to present this workshop, just contact us.
Affording college module 3 saving for collegeFloyd Saunders
The cost of college is increasing faster than almost any of expenses and student debt is a record high levels. What's the alternative? Savings and investing in the right accounts. Learn more about how you can increase the changes you can save for college expenses and afford college. Part three of our workshop. Leader's guide available if you want to present this program. contact us.
Affording college module 2 cost of collegeFloyd Saunders
College is expensive. For many families it is one of the most expensive investments they will make. With student debt crossing over one trillion dollars, every parent and potential college student is concerned about the cost of college. This presentation is a part a workshop series based on the book, "College Without Ramen Noodles, A Guide to Affording College. In additional to the presentation a leader's guide is available. Should you wish to set-up a workshop contact me for details.
Affording College Module 1 why Go To College Floyd Saunders
Is College part of your future? Can you Afford College? Should you even consider college?
In Module One of this workshop, we explore why going to college is a great idea for your future and then some alternatives to starting college right away. Materials are based on my book, "College Without Ramen Noodles, A Guide to Affording College Now." Schedule a workshop now or ask for seminar materials including a leader's guide.
Now you can learn the 12 golden rules of investing success. This is something that all most anyone can learn and apply to achieve greater financial security. Start with the basics and learn all the rules followed by successful investors. You can do this. The presentation is available for purchase from Scribd https://www.scribd.com/doc/241726833/The-12-Golden-Rules-of-Investing
Just the straight facts about raising the minimum wage. There are a lot of myths and frankly misinformation out there about increasing the federal minimum wage in the United States. This presentation just provides some facts about the issue for you to consider.
Ever wonder how people manage to become millionaires? Hint most don't inherit wealth, most don't life a lifestyle that is beyond their means. Play the Millionaire Game and learn the secrets of the rich and almost rich.
This presentation covers the credit card business and highlights the many different types of credit cards available, how credit cards are processed and the major credit card issuers.
A concise overview of the retail banking business in the United States. Part of a continuing series of presentations on the financial services industry.
Mortgage Banking Seminar is part of the continuing series of training presentations for the Financial Services Industry. Check out our other presentations in this series and contact Saunders Learning Group if you have training needs. We can help, we have been doing training in the financial services industry for 30 years.
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
The European Unemployment Puzzle: implications from population aging
Fixed Income Investing Seminar
1. Fixed Income
Investing
Covering Chapter Nine of the book
“Figuring Out Wall Street”
Saunders Learning Group, Newton, KS
May 2012
Part
of
the
Common
Sense
Investor
Series
2. All About Figuring Out Wall Street ...
Saunders Learning Group, Newton, KS
Everything
has
changed
in
the
financial
services
industry
and
it
effects
your
financial
well-‐being.
From
bank
failures,
to
record
unemployment,
home
foreclosures
and
panic
around
the
world,
Figuring
Out
Wall
Street,
is
the
concise
guide
to
help
everyone
from
first
Cme
investors
to
veterans
of
banking
understand
what
to
do
to
persevere
and
restore
our
faith
in
our
financial
systems.
2
This presentation is from Chapter Nine of Figuring Out Wall Street
3. Summary of Book
Saunders Learning Group, Newton, KS
Figuring Out Wall Street Consumer’s
Guide To Financial Markets
By Floyd Saunders
Publisher: Saunders Learning Group
ISBN: 978-0-9824019-0-3
available from Amazon, B&N, and
http://www.figuringout wallstreet.com
or www.floydsaunders.com
Author Contact
email: floyd@floydsaunders.com
Blog: www/money/floydsaunders.com
Twitter @floydsaunders
LinkedIn: http://www.linkedin.com/profile/view?
id=14740656&trk=tab_pro
Facebook: Figuring Out Wall Street
Sideshare: http://www.slideshare.net/FloydSaunders
Book summary: From bank failures to home foreclosures and panic
around the world, Figuring Out Wall Street, is the concise guide to help
everyone understand how this latest crisis happened, who was responsible and
what to do now to restore our financial systems. Written in an easy to
understand manner, even the most complex financial concepts are easy to
digest. This book provides help to monitor investments with a review of
investment products, financial regulators and economic indicators. Learn how
the stock market exchanges work and the world of investment banking, hedge
funds, venture capital and private equity. Every chapter includes action plans
for investing.
4. Saunders
Learning
Group
provides
a
variety
of
training
programs,
workshops
and
seminars
targeted
to
the
financial
services
industry.
Programs
are
available
in
a
wide
range
of
topics,
and
we
are
specialists
in
developing
custom
programs
that
are
targeted
to
your
needs.
Contact
the
founder,
Floyd
Saunders
at
316-‐680-‐6482
or
at
floyd@floydsaunders.com
for
more
informaCon.
Saunders Learning Group, Newton, KS
4
Training from Saunders Learning Group
5. Saunders Learning Group, Newton, KS
This presentation is designed to
give participants information that
will enhance their understanding
of bonds, how they are issued,
how to invest in them and how
they are redeemed.
Introduction
6. What is a Bond?
Saunders Learning Group, Newton, KS
! In
financial
terms
a
bond
is
a
debt
security,
in
which
the
authorized
issuer
owes
the
holders
a
debt
and,
depending
on
the
terms
of
the
bond,
is
obliged
to
pay
interest
(the
coupon)
and/or
to
repay
the
principal
at
a
later
date,
termed
maturity.
! A
bond
is
a
formal
contract
to
repay
borrowed
money
with
interest
at
fixed
intervals.
7. Issuing bonds
! Bonds
are
issued
by
public
authoriCes,
credit
insCtuCons,
companies
and
supranaConal
insCtuCons
in
the
primary
markets.
! The
most
common
process
of
issuing
bonds
is
through
underwriCng.
! In
underwriCng,
one
or
more
securiCes
firms
or
banks,
forming
a
syndicate,
buy
an
enCre
issue
of
bonds
from
an
issuer
and
re-‐sell
them
to
investors.
! The
security
firm
takes
the
risk
of
being
unable
to
sell
on
the
issue
to
end
investors.
Saunders Learning Group, Newton, KS
8. Features of bonds
Saunders Learning Group, Newton, KS
!
Bonds
have
a
number
of
characterisCcs
that
play
a
role
in
determining
the
value
of
a
bond.
! Principal
! Coupon
! Price
! Yield
!
maturity
! credit
quality
9. Principal
The
Principal
is
the
amount
of
money
the
issuer
will
repay
the
bondholder
at
the
maturity
of
bond
Issuer
Bondholder
Saunders Learning Group, Newton, KS
10. Coupon (The Interest Rate)
Saunders Learning Group, Newton, KS
! The
coupon
is
the
amount
the
bondholder
will
receive
as
interest
payments.
— It's
called
a
"coupon"
because
someCmes
there
are
physical
coupons
on
the
bond
that
you
tear
off
and
redeem
for
interest.
— Now
records
are
more
likely
to
be
kept
electronically.
! Most
bonds
pay
interest
every
six
months,
but
it's
possible
for
them
to
pay
monthly,
quarterly
or
annually.
! The
coupon
is
expressed
as
a
percentage
of
the
par
value.
11. Price
The
price
of
the
a
bond
depends
on
four
factors:
"
Market
interest
rates
"
Credit
quality
"
Maturity
"
Supply
&
demand
Saunders Learning Group, Newton, KS
12. Price of a Bond Varies
Saunders Learning Group, Newton, KS
Bond
discount
Par value
premium
Above par value
Below par value
Bond
13. Bond Yield
The
yield
of
a
bond
is
the
rate
of
return
received
from
invesCng
in
the
bond,
is
based
on
the
price
paid
for
the
bond
and
the
coupon
payment.
current
yield=Annual
coupon/
Price
Rate of return on investment
price Coupon payment
Saunders Learning Group, Newton, KS
15. Bond Maturity
! The
maturity
date
is
the
date
in
the
future
on
which
the
investor's
principal
will
be
repaid.
! As
long
as
all
payments
have
been
made,
the
issuer
has
no
more
obligaCon
to
the
bond
holders
a`er
the
maturity
date.
! The
length
of
Cme
unCl
the
maturity
date
is
o`en
referred
to
as
the
term
or
tenor
or
maturity
of
a
bond.
! There
are
three
groups
of
bond
maturiCes:
— short
term
(bills):
maturiCes
up
to
one
year
— medium
term
(notes):
maturiCes
between
one
and
ten
years
— long
term
(bonds):
maturiCes
greater
than
ten
years
! A
bond
that
matures
in
one
year
is
much
more
predictable
and
thus
less
risky
than
a
bond
that
matures
in
20
years.
Therefore,
in
general,
the
longer
the
Cme
to
maturity,
the
higher
the
interest
rate.
! All
things
being
equal,
a
longer
term
bond
will
fluctuate
more
than
a
shorter
term
bond.
Saunders Learning Group, Newton, KS
16. Issuer
Saunders Learning Group, Newton, KS
! Who
is
issuing
a
bond
is
important
to
review,
as
the
issuer's
stability
is
your
main
assurance
of
gebng
paid
back.
! For
example,
the
U.S.
government
is
far
more
secure
than
any
corporaCon.
Its
default
risk
(the
chance
of
the
debt
not
being
paid
back)
is
extremely
small
-‐
so
small
that
U.S.
government
securiCes
are
known
as
risk-‐free
assets.
! The
general
view
is
that
a
government
will
always
be
able
to
bring
in
future
revenue
through
taxaCon.
! A
company,
on
the
other
hand,
must
conCnue
to
make
profits,
which
is
far
from
guaranteed.
! This
added
risk
means
corporale
bonds
must
offer
a
higher
yield
in
order
to
enCce
investors
-‐
this
is
the
risk/return
tradeoff
in
acCon.
17. Credit Quality
The
credit
raCng
of
a
bond
is
important
to
investors
as
it:
! Provides
a
standardized
measures
of
relaCve
credit
quality
! Provides
an
imparCal
view
of
credit
quality
of
the
issue
! Allows
the
investor
to
compare
issues
of
similar
credit
quality
Saunders Learning Group, Newton, KS
18. credit rating
credit risk Moody's standard & Poor's Fitch IBCA
highest quality Aaa AAA AAA
highest quality (very strong) Aa AA AA
upper mediam grade(strong) A A A
medium grade Baa BBB BBB
lower mediam grade Ba BB BB
(some what speculative)
lower grade (speculative) B B B
poor quality (may default) Caa CCC CCC
most speculative Ca CC CC
no interest in being paid or C C C
bankruptcy petition filed
in default C D D
Saunders Learning Group, Newton, KS
19. Types of bonds
! Fixed
rate
bonds
have
a
coupon
that
remains
constant
throughout
the
life
of
the
bond.
! FloaCng
rate
notes
(FRNs)
have
a
variable
coupon
that
is
linked
to
a
reference
rate
of
interest,
such
as
LIBOR
or
Euribor.
! InflaCon
linked
bonds.
in
which
the
principal
amount
and
the
interest
payments
are
indexed
to
inflaCon.
The
interest
rate
is
normally
lower
than
for
fixed
rate
bonds
with
a
comparable
maturity.
!
Asset-‐backed
securiCes
are
bonds
whose
interest
and
principal
payments
are
backed
by
underlying
cash
flows
from
other
assets.
Saunders Learning Group, Newton, KS
20. Types of bonds
! Subordinated bonds are those that have a lower priority than other
bonds of the issuer in case of liquidation.
! Perpetual bonds are also often called perpetuities or Perps'. They
have no maturity date.
! Bearer bond is an official certificate issued without a named holder.
In other words, the person who
has the paper certificate can claim the value of the bond. Often they
are registered by a number to
prevent counterfeiting, but may be traded like cash. Bearer bonds
are very risky because they can be
lost or stolen.
! War bond is a bond issued by a country to fund a war.
Saunders Learning Group, Newton, KS
21. How To Read A Bond Table
Saunders Learning Group, Newton, KS
Column 1: Issuer - This is the company, state (or
province) or country that is issuing the bond.
Column 2: Coupon - The coupon refers to the fixed
interest rate that the issuer pays to the lender.
Column 3: Maturity Date - This is the date on
which the borrower will repay the investors their
principal. Typically, only the last two digits of the
year are quoted: 25 means 2025, 04 is 2004, etc.
Column 4: Bid Price - This is the price someone is
willing to pay for the bond. It is quoted in relation
to 100, no matter what the par value is. Think of
the bid price as a percentage: a bond with a bid of
93 is trading at 93% of its par value.
Column 5: Yield - The yield indicates annual return
until the bond matures. Usually, this is the yield to
maturity, not current yield.
22. Bond Issuing & Investing
! CorporaCons
issue
bonds
to
provide
for
a
number
of
financing
needs.
Some
of
this
financing
could
be
in
the
form
of:
!
commercial
paper
(normally
issued
for
less
than
30
days)
and
used
to
fund
things
like
accounts
payable,
payrolls
etc.
! Short-‐term
bonds
(less
than
a
year)
used
to
fund
capital
requirements
and
provide
addiConal
cash
flow
! Long-‐term
bonds
(more
than
a
year)
used
to
fund
capital
expenses
like
new
buildings
and
equipment.
! Sovereign
govt.
issue
bonds
to
cover
a
shorfall
between
taxaCon
revenue
and
expenditure
! Govt.
agencies,
municipal,
&
local
govt.
authoriCes
issue
bonds
to
fund
their
service
and
operaCons
Saunders Learning Group, Newton, KS
23. Investment Banks
(commonly called the Underwriter)
Role of the Underwriter
# To purchase the district’s bonds directly from the district and re-offer (sell)
them to investors.
Types of Bond Sales
Negotiated sale - District hires an investment banking firm (or firms) to underwrite
its bonds at a negotiated price. The financing structure is determined in
accordance with the district’s specific needs or requirements relative to I&S tax
rate preferences and/or refunding objectives.
# Size of negotiated underwriting team
# With exception of financings under $10, most issuers will hire a team of
from 2 to 6 investment banking firms (depending on the size of the issue).
# Selection process
# Recommendation
# Request For Proposals
# Request For Qualifications
Saunders Learning Group, Newton, KS
24. Investment Banking Specialist
# Investment banking firm specialists involved in the underwriting process
$ The “banker” – called an investment banker, this specialist is part of
the investment banking team.
$ “Bankers” generally have broad knowledge of the capital markets, debt instruments,
debt structuring, document preparation, and marketing/distribution procedures.
$ One of their responsibilities is to solicit potential issuers with the goal of being
included as a member of the issuer’s underwriting team.
$ Once their firm is hired they serve as the key contact/liaison person and coordinate
with all parties to the financing to execute the underwriting.
$ The “underwriter” – an investment banking firm’s specialist who is
directly responsible for pricing a district’s bond issue; i.e.,
determining the lowest possible combination of coupons and yields
that will “sell” in the marketplace at the time of pricing.
$ The “sales representatives” – the persons who actually contact
potential investors and sell the district’s bonds to those investors.
Saunders Learning Group, Newton, KS
25. Steps in the Negotiated Underwriting Process
1. Structuring - the lead investment banking firm (senior managing
underwriter) is usually involved in the initial structuring and/or
determining the plan of finance.
2. Hiring of underwriter’s counsel - the senior managing underwriter, the
financial advisor and the issuer will jointly agree on a firm via
consultation among themselves.
3. Documentation process.
4. Net Designations or Group Net
5. Pre-sale marketing activities by sales force.
6. Pre-sale pricing calls among the underwriters, the FA and the issuer.
7. Order period - usually 2 hours during which the bonds are sold.
8. Sign bond purchase agreement - the district and the senior managing
underwriter.
Saunders Learning Group, Newton, KS
26. HOW BOND MARKETS WORK
Saunders Learning Group, Newton, KS
subtitle 26 date
27. Bond Trading Activity
! Largely an OTC market—no primary physical
location
! Low trading volume relative to stocks
! Par value: face amount, usually $1,000
! Round lot: $1 million of par value
! Relatively illiquid for small investors
Saunders Learning Group, Newton, KS
29. Bond Markets
Primary
market
–
New bonds
Issuer
Investor
Saunders Learning Group, Newton, KS
30. Secondary Market
bonds bonds
Sells
Buys
Investor
A
Broker
Investor
B
Saunders Learning Group, Newton, KS
31. Bond Market Players
! Bond: promise to pay back principal at some future date, plus periodic
interest payments for use of investor’s money
! Bond issuers: entities that supply new bonds
! Bond investors: individuals and institutions that purchase bonds for
interest income and long-term capital gains
! Bond dealers: intermediaries between bond issuers and investors
! Primary bond market: new bonds only; issuer-to-investor
! Secondary bond market: previously issued bonds; investor-to-investor
Saunders Learning Group, Newton, KS
32. U.S. Bond Market
! Market
value
=
$36
trillion
! BOND
MARKET
RELATIVE
TO
STOCK
MARKET
# Average
Daily
Trading
Volume
# U.S.
Bond
Markets
=
$814.0
Billion
# Stock
Market
=
$104.9
Billion
! One
of
largest
securiCes
markets
in
world
! Quickly
reflects
changes
in
credit
quality
and
in
aggregate
economic
condiCons,
including
interest
rates
! Very
efficient
market
mechanism
! Expensive
place
to
trade
for
small
investors
Saunders Learning Group, Newton, KS
33. Tracking Interest Rates
! Federal Funds Rate: overnight bank
lending rate; lowest but most volatile
money market rate
! Discount Rate: interest rate charged by the Federal
Reserve to its member banks; key instrument of
monetary policy
! Eurodollar Rate: interest rate charged for dollar-denominated
loans in European banks
! LIBOR: London Interbank Offered Rates; London fed
funds rate
Saunders Learning Group, Newton, KS
35. Types of bonds
! Fixed
rate
bonds
have
a
coupon
that
remains
constant
throughout
the
life
of
the
bond.
! FloaCng
rate
notes
(FRNs)
have
a
variable
coupon
that
is
linked
to
a
reference
rate
of
interest,
such
as
LIBOR
or
Euribor.
! InflaCon
linked
bonds.
in
which
the
principal
amount
and
the
interest
payments
are
indexed
to
inflaCon.
The
interest
rate
is
normally
lower
than
for
fixed
rate
bonds
with
a
comparable
maturity.
Saunders Learning Group, Newton, KS
!
Asset-‐backed
securiCes
are
bonds
whose
interest
and
principal
payments
are
backed
by
underlying
cash
flows
from
other
assets.
! Subordinated
bonds
are
those
that
have
a
lower
priority
than
other
bonds
of
the
issuer
in
case
of
liquidaCon.
! Perpetual
bonds
are
also
o`en
called
perpetuiCes
or
Perps'.
They
have
no
maturity
date.
! Bearer
bond
is
an
official
cerCficate
issued
without
a
named
holder.
In
other
words,
the
person
who
has
the
paper
cerCficate
can
claim
the
value
of
the
bond.
O`en
they
are
registered
by
a
number
to
prevent
counterfeiCng,
but
may
be
traded
like
cash.
Bearer
bonds
are
very
risky
because
they
can
be
lost
or
stolen.
! War
bond
is
a
bond
issued
by
a
country
to
fund
a
war.
36. Types Of Bonds
$ Callable Bonds - A bond that can be redeemed by the
issuer prior to its maturity. The main cause of a call is a
decline in interest rates
$ Convertible Bonds – A bond that can be converted into a
predetermined amount of the company's equity at certain
times during its life
$ Eurodollar Bonds - U.S.-dollar denominated bond issued by an overseas company and held in
a foreign institution outside both the U.S. and the issuer's home nation. Chinese bank held
dollar-denominated bonds issued by a Japanese company, this would be considered a
eurodollar bond.
$ Eurobond – An international bond that is denominated in a currency not native to the
country where it is issued
$ Yankee Bond - A bond denominated in U.S. dollars that is publicly issued in the U.S. by
foreign banks and corporations
$ Bulldog Bond - A sterling denominated bond that is issued in London by a company that is
not British
Maple Bond - A bond denominated in Canadian dollars that is sold in Canada by foreign
financial institutions
$ Matilda/Kangaroo Bond - An bond denominated in the Australian dollar and issued on
the Australian market by a foreign entity
$ Samurai Bond - Yen-denominated bond issued in Tokyo by a non-Japanese company
Saunders Learning Group, Newton, KS
36
37. Corporate Bonds
Uses of Corporate Debt
! Corporations must raise money to finance investments:
— inventory,
— plant and equipment,
— research and development,
— general business expansion.
! Corporations can issue equity securities (stocks), debt securities
(bonds), or a combination of both
! Firms wish to minimize their cost of capital.
! Firms match their financing requirements with investor needs to issue
a wide variety of debt instruments.
! Most corporate bonds bought by underwriters--no certificate issued,
just book-entry form
Saunders Learning Group, Newton, KS
39. Government Debt
Government Sources of Funds:
$ Collect tax revenues
$ Print more money
$ Issue public debt
$ Treasury Bills: Maturities with 6,12 & 18 months duration
$ Issued by the government Treasury department
$ Always issued at discount
$ Treasury Notes: 1-10 year maturities
$ Treasury Bonds: long term; 10-30 year maturities
$ Fixed interest rate with annual coupon payments
$ Government-Sponsored Enterprises
$ Pools
$ Mortgage Securities /Securitization
$ GNMA
$ Fannie Mae
$ Freddie Mac
Saunders Learning Group, Newton, KS
U.S. TREASURY SECURITIES
$ Implement monetary policy—
Federal Reserve System trades
through its New York branch.
$ Increase money supply:
buys Treasuries
$ Decrease money supply:
sells Treasuries
$ Efficient means to finance
federal deficit
$ Treasury issues bonds, notes, bills
through regularly scheduled
public auctions to primary
dealers
$ Dealers obligated to bid at
every auction
$ Must maintain bids, offers
and inventories for
secondary market
40. Treasury Securities Secondary Market
Secondary
Market
for
U.S.
Treasury
SecuriCes
$ Safest
bonds
in
circulaCon
$ Enormous
trading
volume:
$190.7
billion
per
day;
most
liquid
market
in
world
$ T-‐bills:
$ mature
in
less
than
one
year,
usually
3
and
6
months
$ face
values
of
$10,000
to
$1
million
$ do
not
pay
interest;
traded
at
discount
from
par
$ T-‐notes:
$ maturiCes
1-‐10
yrs
$ semiannual
interest
$ face
values
of
$5,000
to
$1
million
$ T-‐bonds:
10
to
30
yr.
maturiCes
Saunders Learning Group, Newton, KS
Agency
&
Asset-‐Backed
SecuriCes
Markets
$ Government-‐sponsored
enterprises:
private
corporaCons
with
public
purposes
$ Pools:
diversified
loan
porfolios
$ Mortgage
securiCzaCon:
creaCng
pools
of
mortgages
and
selling
shares
of
pools
$ Ginnie
Maes,
Fannie
Maes,
Freddie
Macs
$ Ac1ve
secondary
market
provides
liquidity
$ Pay
low
semiannual
interest
$ Other
asset-‐backed
securiCes:
$ credit
card
debt,
auto
loans,
home
equity
loans,
equipment
leases
$ Repo
market:
dealers
lend
securiCes
short
term
41. U.S. Treasury Securities Secondary Market
Secondary
Market
for
U.S.
Treasury
SecuriCes
$ Safest
bonds
in
circulaCon
$ Enormous
trading
volume:
$190.7
billion
per
day;
most
liquid
market
in
world
$ T-‐bills:
$ mature
in
less
than
one
year,
usually
3
and
6
months
$ face
values
of
$10,000
to
$1
million
$ do
not
pay
interest;
traded
at
discount
from
par
$ T-‐notes:
$ maturiCes
1-‐10
yrs
$ semiannual
interest
$ face
values
of
$5,000
to
$1
million
$ T-‐bonds:
10
to
30
yr.
maturiCes
Saunders Learning Group, Newton, KS
Agency
&
Asset-‐Backed
SecuriCes
Markets
$ Government-‐sponsored
enterprises:
private
corporaCons
with
public
purposes
$ Pools:
diversified
loan
porfolios
$ Mortgage
securiCzaCon:
creaCng
pools
of
mortgages
and
selling
shares
of
pools
$ Ginnie
Maes,
Fannie
Maes,
Freddie
Macs
$ Ac1ve
secondary
market
provides
liquidity
$ Pay
low
semiannual
interest
$ Other
asset-‐backed
securiCes:
$ credit
card
debt,
auto
loans,
home
equity
loans,
equipment
leases
$ Repo
market:
dealers
lend
securiCes
short
term
42. THE MONEY MARKET
$ Buying and selling short-term debt securities; quick cash conversion
$ Safety: short maturities and diversification
$ Include Private Paper:
$ Commercial paper
$ Bankers’ acceptances (Bas)
$ Jumbo CDs
$ State & Local Governments: Project Notes
$ tax anticipation notes
$ bond anticipation notes
$ revenue anticipation notes
Saunders Learning Group, Newton, KS
43. Municipal Securities
$ Municipal
Bonds
$ Bonds
anCcipaCng
future
cash
$ Tax-‐AnCcipaCon
Notes
$ Bond-‐anCcipaCon
Notes
$ Revenue-‐AnCcipaCon
Notes
$ Clientele
Effect
$ High
tax
bracket
investors
Saunders Learning Group, Newton, KS
$ Limited Tax Bonds
$ Payable from cash
generated by specific
tax
$ Revenue
Bonds
$ Industrial
Revenue
Bonds
$ Backed
by
Good
Name
of
Municipality
$ Moral
ObligaCon
Bonds
$ General
ObligaCon
(GO)
Bonds
$ Double-‐Barreled
Bonds
$ Backed
by
2+
sources
of
funds
44. Fixed Income Products
$ Repo
–
Repurchase
Agreements
$ Is
a
contract
in
which
a
security
is
sold
with
an
agreement
to
repurchase
the
security
at
a
higher
price
$ Reverse
Repo
is
a
contract
in
which
a
security
is
borrowed
with
an
agreement
to
replace
the
security
at
a
higher
price
$ Secured
lending
and
borrowing
Saunders Learning Group, Newton, KS
45. Fixed Income Products
$ Commercial Paper – An unsecured,
short-term debt instrument issued
by a corporation, typically for the
financing of accounts receivable,
inventories and meeting short-term
liabilities.
$ Short term with maturities 1,3,
6,12 & 18 months
$ Maturities on commercial paper rarely
range any longer than 270 days
$ Placed in the primary market through
competitive auctions
$ Convertible/Exchangeable Bonds
$ Enables a financial asset to be transformed into other
$ Certificate of Deposit or CD is a time deposit, a financial product
commonly offered to consumers by banks, thrift institutions, and credit
unions
$ Held until maturity
Saunders Learning Group, Newton, KS
51. Interest Rate Swap
$ Interest rate swap is a
derivative in which one
party exchanges a stream
of interest payments for
another party's stream of
cash flows
$ Fixed for floating/Vanilla
Interest Rate Swaps
$ Often use LIBOR as
reference rates
$ Hedging/Speculation on
interest & FX rates
Saunders Learning Group, Newton, KS
51 Understanding Fixed Income
Instruments
53. Swaps
$ A swap is an option granting its owner the
right but not the obligation to enter into
an underlying swap
$ A payer swap gives the owner of
the swap the right to enter into a
swap where they pay the fixed leg
and receive the floating leg.
$ A receiver swap gives the owner of
the swap the right to enter into a
swap where they will receive the
fixed leg, and pay the floating leg.
Saunders Learning Group, Newton, KS
54. Conclusion
! Bonds
are
just
like
lOUs.
Buying
a
bond
means
you
are
lending
out
your
money.
! Bonds
are
also
called
fixed-‐income
securiCes
because
the
cash
flow
from
them
is
fixed.
! The
issuers
of
bonds
are
governments
and
corporaCons.
! A
bond
is
characterized
by
its
face
value,
coupon
rate,
maturity
and
issuer.
! Yield
is
the
rate
of
return
you
get
on
a
bond.
! When
price
goes
up,
yield
goes
down,
and
vice
versa.
! When
interest
rates
rise,
the
price
of
bonds
in
the
market
falls,
and
vice
versa.
! Bills,
notes
and
bonds
are
all
fixed-‐income
securiCes
classified
by
maturity.
! Government
bonds
are
the
safest
bonds,
followed
by
municipal
bonds,
and
then
corporate
bonds.
! Bonds
are
not
risk
free.
It's
always
possible
-‐
especially
in
the
case
of
corporate
bonds
-‐
for
the
borrower
to
default
on
the
debt
payments.
Saunders Learning Group, Newton, KS
56. Reference Material
Saunders Learning Group, Newton, KS
Figuring Out Wall Street Consumer’s Guide To
Financial Markets
By Floyd Saunders
Publisher: Saunders Learning Group
ISBN: 978-0-9824019-0-3
available from Amazon, B&N, and http://
www.figuringout wallstreet.com
or www.floydsaunders.com
Book summary: From bank failures to home foreclosures and panic
around the world, Figuring Out Wall Street, is the concise guide to help
everyone understand how this latest crisis happened, who was responsible and
what to do now to restore our financial systems. Written in an easy to
understand manner, even the most complex financial concepts are easy to
digest. This book provides help to monitor investments with a review of
investment products, financial regulators and economic indicators. Learn how
the stock market exchanges work and the world of investment banking, hedge
funds, venture capital and private equity. Every chapter includes action plans
for investing.
57. Glossary of Bond Finance Terms - A
Accrued interest. Coupon interest accumulated on a bond or other obligation since the last interest payment or, for a new
issue, from the dated date to the date of delivery. Usually interest on municipal bonds is payable semi-annually, every six
months. When you buy a bond in mid-term you are only entitled to the interest the bond earns after you buy it. The interest
earned previously, the accrued interest, belongs to the seller.
Ad Valorem Tax. A state or local government tax based on the value of real property as determined by the county tax assessor.
Advanced Refunded Bonds. A municipality or school district may sell a second bond issue at a lower interest rate cost, placing
the proceeds of the issue in an escrow account from which the first issue's principal and interest will be repaid when due.
Amortization of Debt. The annual reduction of principal through the use of serial bonds or term bonds with a sinking fund.
Arbitrage. The interest rate differential that exists when proceeds from a municipal bond - which is tax-free and carries a lower
yield - are invested in taxable securities with a yield that is higher. The 1986 Tax Reform Act made this practice by municipalities
illegal solely as a borrowing tactic, except under certain safe-harbor conditions.
Assessed Valuation. A municipality's worth in dollars based on real estate and/or other property for the purpose of taxation,
sometimes expressed as a percent of the full market value of the community.
Authorizing Ordinance. A law that when enacted allows the unit of government to sell a specific bond issue or finance a specific
project.
Average Life. The average length of time an issue of serial bonds and/or term bonds with mandatory sinking funds and/or
estimated prepayments is expected to be outstanding. It also can be the average maturity of a bond portfolio.
Saunders Learning Group, Newton, KS
58. Glossary of Bond Finance Terms - B
Balloon Maturity. An inordinately large amount of bond principal maturing in any single year. This is also referred to as a Term Bond.
Bond Anticipation Note. A short-term security, one year or less, used for interim financing to be repaid from the proceeds of a planned
long-term bond issue.
Basis Point. One one-hundredth of one percent (1/100 % or 0.01 percent). Thus 25 basis points equal one-quarter of one percent, 100
basis points equal one percent. This is typical in-group, professional bond talk.
Bid. An offer to buy at a fixed price or yield. As opposed to Ask, which is an offering to sell.
Bond or note. A security whereby an issuer borrows money from an investor and agrees and promises, by written contract, to pay a
fixed principal sum on a specified date (maturity date) and at a specified rate of interest.
Bond Fund (Tax-Exempt). A Bond Fund is a portfolio of municipal bonds sponsored or administered by registered investment companies.
These companies offer shares to investors either through (1) closed-end funds or unit investment trusts, which offer shares of a fixed
portfolio of municipal bonds; or (2) open-end or managed funds, which offer shares in a managed portfolio of municipal bonds whose
size will vary as shares are purchased or redeemed.
Bond Insurance. Insurance issued by a private insurance company for either an entire issue or specific maturities that guarantees to
pay principal and interest when due.
Bond Premium. The amount at which a bond or note is bought or sold above its par value or face value without including accrued
interest.
Bonded Debt. The portion of an issuer's debt structure represented by outstanding bonds, sometimes limited by constitutional or
legislative restraints.
Book Entry. A system of security ownership in which the ownership is held as a computer entry on the records of a central company for
its owner. The bond owner gets a computer printout as proof of ownership.
Broker. Technically a broker is a bond trader in the secondary market buying from and selling to bond dealers. Its most common usage
is as a description of a bond salesperson.
Saunders Learning Group, Newton, KS
59. Glossary of Bond Finance Terms - C
Callable Bond. A bond or note that is subject to redemption at the option of the issuer prior to its stated maturity.
The call date and call premium, if any, is stated in the offering statement or broker's confirmation.
Certificates of Participation (COPs). A form of a lease revenue bond that permits the investor to participate in a
stream of installment payments, lease payments or loan payments relating to the acquisition or construction of
specific equipment, land or facilities. COPs are not viewed legally as "debt" because payment is tied to an annual
appropriation by the government body. As a result, COPs are seen by investors as providing weaker security and
often carry ratings that are a notch or two below an agency's general obligation rating.
Coupon. The Coupon is the detachable part of a bond that displays the rate of interest due, and the interest
payment date. When there were bearer bonds, coupons were often detached from the bonds and presented to
the paying agent for payment just as one might cash a government check.
Coupon Rate. The specified annual interest rate payable to the bond or note holder as printed on the bond. This
term is still used even though there are no coupon bonds anymore.
Covenant. A legally binding commitment by the issuer of municipal bonds to the bondholder. This is the issuer’s
promise to perform or repay, conversely, an impairment of a covenant can lead to a Technical Default.
Current Refunding. A refunding transaction where the municipal securities being refunding will all mature or be
redeemed within 90 days or less from the date of issuance of the refunding issue.
Current Yield. The ratio of the coupon rate on a bond to the dollar purchase price expressed as a percentage.
Cushion Bonds. Bonds selling at a premium are called "cushion" bonds because they cushion the price volatility in
an up and down market. A premium bond, by definition, has a higher-than-market coupon interest rate. The dollar
price movement of a high interest rate bond is less than that of a lower interest rate bond of the same maturity
when general interest rates move up or down a few basis points.
Saunders Learning Group, Newton, KS
60. Glossary of Bond Finance Terms - D
Dated Date. The date carried on the face of a bond or note from which interest normally begins to accrue, the
“dated date”.
Dealer. A dealer is a corporation or partnership that buys and sells and maintains an ongoing position in bonds
and/or notes. They are also authorized to underwrite new issues.
Debt Limited. The debt limit is the maximum statutory or constitutional amount of debt that the general
obligation bond issuer can either issue or have outstanding at any time.
Debt Ratio. The ratio of the issuer's general obligation debt to a measure of value, like real property valuations,
personal income, general fund resources, or population.
Debt Service. Required payments for principal and interest.
Default. Failure to pay in a timely manner principal and/or interest when due, or a Technical Default, the
occurrence of an event as stipulated in the Indenture of Trust resulting in an abrogation of that agreement. A
Technical Default can be a warning sign that a default on debt service is coming, however in the real world actual
debt service interruption does not always occur if the problems are resolved in time.
Defeased Bonds. Refunded bonds for which the payment of principal and interest has been assured through the
structuring of a portfolio of government securities, the principal and interest on which will be sufficient to pay
debt service on the refunded, outstanding bonds. When a bond issue is defeased, the claim on the revenues of the
issuer is usually eliminated.
Saunders Learning Group, Newton, KS
61. Glossary of Bond Finance Terms - D
Delivery. Delivery and payment must be in three business days for bonds bought or sold in the secondary market.
For new issues, the time when payment is made to, and the executed bonds and notes are received from, the
issuer. New-issue delivery takes place several weeks after the sale to allow the bonds and notes to be printed and
signed.
Denomination. The face or par amount - normally $1000 or $5000 but can be $100,000 or more in the case of a
note - that the issuer promises to pay at a specific bond or note maturity.
Direct Debt. In general obligation bond analysis, the amount of debt that a particular local unit of government has
incurred in its own name or assumed through annexation.
Discount. The amount of dollars by which market value of a bond is less than par value or face value.
Discount Bonds. Bonds which sell at a dollar price below par in which case the yield would exceed the coupon
rate. The difference between the discount price and the maturity price is subject to federal capital gains tax
except in the case of Original Issue Discount Bonds.
Dollar Bond. Generally a term bond that is quoted and traded in dollars rather than in yield-to-maturity. They are
well known issues of well known names in the market.
Saunders Learning Group, Newton, KS
62. Glossary of Bond Finance Terms – E to F
Escrow Fund. A fund that contains monies that only can be used to pay debt service.
Escrowed to Maturity. Also called an “Advanced Refunded” bond. When interest rates fall, an issuer may chose to
sell a new issue called a refunding issue and use the proceeds of the second issue to pay off the original issue,
much the same as a home owner refinancing a mortgage in an effort to save interest costs. The proceeds of the
refunding issue are used to structure a portfolio of U.S. government securities, the principal and interest
payments of which exactly match the principal and interest payments of the refunded bonds. The portfolio is
placed in escrow at the paying agent and the bond issue is said to be fully defeased and escrowed to maturity. In
actual practice the bonds are usually called on the first call date. Because of the U.S. Treasury backing, advanced
refunded or escrowed to maturity bonds are considered the safest municipal bonds available and trade on the
market as a rich triple-A.
Financial Advisor. Generally an independent consulting firm, an investment-banking company, individual, or bank
that advises the issuer on financial matters regarding a proposed issue and is not part of the underwriting
syndicate.
Fiscal Agent. Also known as the Paying Agent, the bank, designated by the issuer, to pay interest and principal to
the bondholder.
Fiscal Year. A 12-month time horizon by which state and local governments annually budget their respective
revenues and expenditures. Often this time horizon is from July to June but can vary.
Flow of Funds. The annual legal sequence by which enterprise revenues are paid out for operating and
maintenance costs, debt service, sinking fund payments, and so on.
Full Faith and Credit. The pledge of "the full faith and credit and taxing power without limitation as to rate or
amount." This phrase is generally used regarding General Obligation bonds to express the pledge of utilizing all
taxing powers and resources, if necessary, to pay the bond holders.
Saunders Learning Group, Newton, KS
63. Glossary of Bond Finance Terms – G, H , I
General Obligation Bond. (G.O.) A bond secured by a pledge of the issuer's taxing powers (limited or unlimited).
Considered the most secure of all municipal debt. General obligation bonds of local governments are paid from ad
valorem property taxes and other general revenues.
Guaranteed Yield: The guaranteed yield is a school finance plan in which the state specifies a revenue yield that
it will guarantee in terms of revenue per student per penny of local tax effort. Districts adopt tax rates and levy
taxes. The state makes up the difference between what each district levies locally per student and the guaranteed
yield per student. High-wealth districts may raise all of their guaranteed yield revenue from local tax sources.
Hold Harmless: Hold harmless provisions are common when a significant change is made to a formula or funding
source. "Hold harmless" is a term used to describe a provision in new law that is designed to protect a school
district from a loss of local revenue or state aid.
Indenture of Trust. A legal document describing in specific detail the terms and conditions of a bond offering, the
rights of the bondholder, and the obligations of the issuer to the bondholder; such document is alternatively
referred to as a bond resolution.
Interest and Sinking Fund (I&S) Tax Rate: Also referred to as the debt service tax rate, the I&S taxes pay for
bonded indebtedness, facilities, and other capital needs.
Interim Borrowing. (1) Short-term loans to be repaid from general revenues or tax collections during the current
fiscal year (TRANs or RANs); (2) short-term loans in anticipation of bond issuance or grant receipts (BANs).
Investment Grade. Bond issues that the three major bond rating agencies, Moody's, Standard & Poor's, and Fitch
rate BBB or Baa or better. Many fiduciaries, trustees, some mutual fund managers can only invest in securities with
an investment grade rating.
Saunders Learning Group, Newton, KS
64. Glossary of Bond Finance Terms – J & L
Junk Bonds. Most non-rated bonds and bonds rated below investment grade.
Legal Opinion. A written opinion from bond counsel that an issue of bonds was duly authorized and issued. The
opinion usually includes the statement, "interest received thereon is exempt from federal taxes and, in certain
circumstances, from state and local taxes."
Letter of Credit. A form of supplement or, in some cases, direct security for a municipal bond under which a
commercial bank or private corporation guarantees payment on the bond under certain specified conditions.
Level Debt Service. Principal and interest payments that, together, represent more or less equal annual payments
over the life of the loan. Principal may be serial maturities or sinking fund installments.
Lien. A claim on revenues, assessments or taxes made for a specific issue of bonds.
Limited Tax Bond. A bond secured by a pledge of a tax that is limited as to rate or amount.
Saunders Learning Group, Newton, KS
65. Glossary of Bond Finance Terms – M & N
Maximum Annual Debt Service. The maximum amount of principal and interest due by a revenue bond issuer on
its outstanding bonds in any future fiscal year. This is sometimes the amount to be maintained in the Debt Service
Reserve Fund.
Municipal Bond. Bonds issued by any of the 50 states, the territories and their subdivisions, counties, cities,
towns, villages and school districts, agencies, such as authorities and special districts created by the states, and
certain federally sponsored agencies such as local housing authorities. Historically, the interest paid on theses
bonds has been exempt from federal income taxes and is generally exempt from state and local taxes in the state
of issuance.
Municipal Securities Rulemaking Board (MSRB). An independent self-regulatory organization established by
Congress in 1975 which is charged with primary rulemaking authority - under the SEC - over dealers, dealer banks,
and brokers in the municipal securities industry.
Net Bonded Debt. Gross general obligation debt minus self-supporting general obligation debt, housing bonds,
water revenue bonds, etc.
Net Interest Cost (NIC). In general, issuers award competitive bond sales to the underwriter bidding the lowest
NIC. This represents the average coupon rate weighted to reflect the time until repayment of principal and
adjusted for the premium or discount.
Net Revenue Available for Debt Service. Usually, gross operating revenues of an enterprise less operating and
maintenance expenses but exclusive of depreciation and bond principal and interest. Thus, net revenue is defined
to determine coverage on revenue bond issues.
Saunders Learning Group, Newton, KS
66. Glossary of Bond Finance Terms - O
Official Statement (OS) or Offering Circular (OC). A document or prospectus circulated for an issuer prior to a
bond sale with relevant facts pertaining to the proposed financing. Usually there are two OSs, the first of which is
known as the preliminary, or "red herring" - so named because some of the type on its cover is printed in red. The
prospectus or red herring is supposed to be available to the investor prior to the sale often used to determine
interest from investors.
Original Issue Discount. Certain maturities of a new bond issue may have an offering price substantially below
par. The appreciation from the original price to par over the life of the bonds is treated as tax-exempt income
and is not subject to capital gains tax. Pleas see Zero Coupon Bond.
O.T.C. Over The Counter. Not on an exchange. OTC refers to the buying and selling method used in the
secondary market for municipal bonds and unlisted stocks.
Overlapping Debt. Overlapping debt is the proportionate share of the general obligation bonds of local
governments located wholly or in part within the limits of the reporting governmental entity that must be paid by
property owners within the unit.
Saunders Learning Group, Newton, KS
67. Glossary of Bond Finance Terms - P
Par Value. Par Value is the principal or face value of a bond, usually $5,000 due the holder at maturity. It has no
relation to the market value. It is considered to be 100 for pricing purposes.
Parity Bonds. Revenue bonds that have an equal lien on the revenues of the issuer.
Paying Agent. Also Fiscal Agent. Generally a bank that performs the function of paying interest and principal for
the issuing body.
Premium. A premium is the amount by which the price exceeds the principal amount (par value) of a bond. The
current yield of a premium bond will be less than its coupon rate.
Price to Call. The yield of a bond priced to the first call date rather than maturity.
Primary Market. The new issue market
Principal. The face value of a bond, not including interest.
Put Bond. A put bond that can be redeemed by the bondholder on a date or on a date or dates prior to the stated
maturity date.
Saunders Learning Group, Newton, KS
68. Glossary of Bond Finance Terms Q & R
Qualified Legal Opinion. Conditional affirmation of the legal basis for the bond or note issue. The average
investor should avoid any but the strongest opinion by the most recognized bond approving attorneys.
Rate Covenant. A legal commitment by a revenue bond issuer to maintain rates at levels to generate a specified
debt-service coverage.
Ratings. Various alphabetical and numerical designations used by institutional investors, Wall Street underwriters,
and commercial rating companies to give relative indications of bond and note creditworthiness. Standard &
Poor's and Fitch Investors Service Inc. use the same system, starting with their highest rating of AAA, AA, A, BBB,
BB, B, CCC, CC, C, and D for default. Moody's Investors Services uses Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, and D .
Recapture: Also referred to as the “Robin Hood” provision. Recapture is a characteristic of school finance where
local districts give the state locally collected property tax revenues for reallocation through the Foundation School
Program. Chapter 41 of the Texas Education Code is where the recapture provision can be found and is a
significant feature of the Texas school finance equalization system.
Red Herring. A preliminary offering statement, subject to final change and update upon completion of sale of
bonds. The name comes from the red type along the side on the cover.
Redemption. Process of retiring existing bonds prior to maturity from excess earnings or proceeds of refunding
bonds. It also refers to redeeming shares in a mutual fund by selling the shares back to the sponsor.
Refunding Bond. The issuance of a new bond for the purpose of retiring an already outstanding bond issue.
Registered Bond. A non-negotiable instrument in the name of the holder either registered as to principal or as to
principal and interest.
Saunders Learning Group, Newton, KS
69. Glossary of Bond Finance Terms - S
Security. The legally available revenues and assets that are used to pay the bond holders. This is the key
component that supports debt service.
Serial Bond. As opposed to a Term Bond, which is a large block of bonds maturing in a single year, a serial bond is
an issue that features maturities every year, annually or semiannually over a period of years.
Short Term. Bonds or notes sold on an interim basis with tax-exempt securities for a period of from one to five
years.
Sinking Fund. A sinking fund is where monies are escrowed on a periodic basis to retire term bonds at or prior to
maturity.
Sinking Fund Schedule. A schedule of payments required under the original revenue bond resolutions to be placed
each year into a special fund, called the sinking fund, and to be used for retiring a specified portion of a term
bond issue prior to maturity.
Special Assessment Bond. A bond secured by a levy of special assessments, as opposed to property taxes, made by
a local unit of government on certain properties to pay the cost of local improvements and/or services that
represents the specific benefit to the property owner resulting from the improvement.
Street Name. Street name refers to the registration of bonds in the name of a dealer or other third party instead
of the owner, usually for custodial or safe keeping purposes.
Swap. The exchange of one bond for another. Generally, the act of selling a bond to establish an income tax loss
and replacing the bond with a new item of comparable value.
Saunders Learning Group, Newton, KS
70. Glossary of Bond Finance Terms - T
Tax Base. The total resource of the community that is legally available for taxation.
Taxable Equivalent Yield. The yield an investor would have to obtain on a taxable corporate or U.S. government bond to
match the same after-tax yield on a municipal bond.
Tax-exempt Bond. Bonds exempt from federal income, state income, or state tax and local personal property taxes. This
tax exemption results from the theory of reciprocal immunity: States do not tax instruments of the federal government
and the federal government does not tax interest of securities of state and local governments.
Technical Default. Failure by the issuer to meet the requirements of a bond covenant. These defaults do not necessarily
result in losses to the bond holder. The default may be cured by simple changes of policy or actions by the issuer.
Tender. The act of offering bonds to a sinking fund.
Term Bond. A large block of bonds of long maturity. They may be part of a serial Bond issue; there may be more than one
term bond in an issue or a single maturity. Some are subject to a sinking fund redemption.
Tombstone. An advertisement placed for information purposes, after bonds or notes are sold, that describes certain
details of the issue and lists the managing underwriters and or the members of the underwriting syndicate.
Trustee. A bank designated as the custodian of funds and official representative of bondholders. Trustees are appointed to
insure compliance with the trust indenture and represents bondholders to enforce their contract with the issuer.
Saunders Learning Group, Newton, KS
71. Glossary of Bond Finance Terms U to Z
Underwrite. An agreement to purchase an issuer's unsold securities at a set price, thereby guaranteeing the issuer
proceeds and a fixed borrowing cost.
Variable Rate Bond. A bond whose yield is adjusted periodically according to a prescribed formula.
Yield Curve. Graph depicting the relationship between yields and current maturity for securities with identical
default risk.
Yield-to-call. Return available to call date taking into consideration the current value of the call premium, if any.
Yield-to-maturity. (YTM) Return available taking into account the interest rate, length of time to maturity, and
price paid. It is assumed that the coupon reinvestment rate for the life of the bonds will be the same as the yield-to-
maturity.
Zero-coupon Bonds. A deep discount municipal bond on which no current interest is paid. Instead, at bond
maturity, the investor receives compounded interest at a specified rate. The difference between the discount
price at purchase and the accreted value at maturity is not taxed as a capital gain but is considered tax-exempt
interest. Often used for college savings bonds.
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