- C1 Bond
- A long-term liability paid off in a series of interest payments and a final principal payment, split into transferable shares.
- C1 Par value (face amount)
- The amount printed on the bond, paid to the holder at maturity, and the base for computing cash interest.
- C1 Contract rate (coupon rate)
- The rate printed on the bond, fixing the cash interest paid — it never changes over the bond's life.
- C1 Market rate
- The rate investors currently demand for bonds of similar risk; it prices the bond and can differ from the contract rate.
- C1 Bond indenture
- The legal contract identifying the rights and obligations of bondholders and the issuer.
- C1 Bond certificate
- The physical or electronic document evidencing a bondholder’s claim.
- P1 Discount on bonds payable
- A contra liability recording the amount by which issue price is below par; arises when the market rate exceeds the contract rate.
- P1 Premium on bonds payable
- An adjunct liability recording the amount by which issue price is above par; arises when the contract rate exceeds the market rate.
- P1 Carrying (book) value of bonds
- Par value minus any unamortized discount, or plus any unamortized premium.
- P2 Straight-line bond amortization
- Moving an equal slice of the discount or premium to interest expense each period.
- P3 Effective interest method
- Computing interest expense each period as the market rate times the beginning carrying value.
- C1 Callable bonds
- Bonds the issuer can retire before maturity at a stated call price.
- C1 Convertible bonds
- Bonds the holder can exchange for a fixed number of shares of the issuer’s stock.
- C1 Secured bonds
- Bonds backed by a pledge of specific issuer assets.
- C1 Unsecured bonds (debentures)
- Bonds backed only by the issuer’s general credit standing, not a specific pledge.
- C1 Term bonds
- Bonds that all mature at the same date.
- C1 Serial bonds
- Bonds that mature in installments over several dates.
- C1 Registered bonds
- Bonds issued in the owner’s name; the issuer pays that owner directly.
- C1 Bearer bonds
- Unregistered bonds payable to whoever holds the certificate.
- C1 Sinking fund bonds
- Bonds requiring the issuer to set assets aside toward their retirement.
- P4 Installment note
- A liability requiring a series of periodic payments, each covering interest on the unpaid balance plus a portion of principal.
- P4 Mortgage
- [book?] — check this edition’s exact terminology. A long-term note secured by a pledge of specific property.
- P1 Present value
- The value today of an amount to be received or paid in the future, discounted at a given rate.
- P1 Annuity
- A series of equal payments made at equal time intervals.
- C1 Lease
- [book?] — check this edition’s exact terminology. A contract granting the right to use an asset for a period in exchange for payments.
- C1 Pension plan
- [book?] — check this edition’s exact terminology. An agreement by an employer to provide benefits to employees after they retire.
- A2 Debt-to-equity ratio
- Total liabilities divided by total equity; measures how much of financing comes from creditors versus owners.