What is bond? What is notes payable? What is debt and security investment? You can get the answer on this page.

  • Bonds – A form of interest-bearing notes payable issued by corporations, universities, and governmental entities.
  • Debt investments – Investments in government and corporation bonds.
  • Convertible bonds – Bonds that permit bondholders to convert them into common stock at the bondholders’ option.
  • Debenture bonds – Bonds issued against the general credit of the borrower. Also called unsecured bonds.
  • Callable bonds – Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer.
  • Mortgage bond – A bond secured by real estate.
  • Secured bonds – Bonds that have specific assets of the issuer pledged as collateral.
  • Unsecured bonds – Bonds issued against the general credit of the borrower. Also called debenture bonds.
  • Registered bonds – Bonds issued in the name of the owner.
  • Serial bonds – Bonds that mature in installments.
  • Sinking fund bonds – Bonds secured by specific assets set aside to retire them.
  • Term bonds – Bonds that mature at a single specified future date.
  • Bond indenture – A legal document that sets forth the terms of the bond issue.
  • Bond certificate – A legal document that indicates the name of the issuer, the face value of the bonds, the contractual interest rate and maturity date of the bonds.
  • Bearer (coupon) bonds – Bonds not registered in the name of the owner.
  • Premium (on a bond) – The difference between the selling price and the face value of a bond, when the bond is sold for more than its face value.
  • Discount (on a bond) – The difference between the face value of a bond and its selling price, when the bond is sold for less than its face value.
  • Trading securities – Securities bought and held primarily for sale in the near term to generate income on short-term price differences.
  • Investment portfolio – A group of stocks and/or debt securities in different corporations held for investment purposes.
  • Short-term investments – Investments that are readily marketable and intended to be converted into cash within the next year or operating cycle, whichever is longer.
  • Stock investments – Investments in the capital stock of other corporations.
  • Parent company – A company that owns more than 50% of the common stock of another entity.
  • Long-term investments – Investments that are not readily marketable or that management does not intend to convert into cash within the next year or operating cycle, whichever is longer.
  • Available-for-sale securities – Securities that are held with the intent of selling them sometime in the future.
  • Held-to-maturity securities – Debt securities that the investor has the intent and ability to hold to their maturity date.
  • Face value (par value) – Amount of principal the issuer must pay at the maturity date of the bond.
  • Capital lease – A contractual arrangement that transfers substantially all the benefits and risks of ownership to the lessee so that the lease is in effect a purchase of the property.
  • Contractual interest rate – Rate used to determine the amount of cash interest the borrower pays and the investor receives.
  • Debt to total assets ratio – A solvency measure that indicates the percentage of total assets provided by creditors; computed as total debt divided by total assets.
  • Market interest rate – The rate investors demand for loaning funds to the corporation.
  • Mortgage notes payable – A long-term note secured by a mortgage that pledges title to specific assets as security for a loan.
  • Operating lease – A contractual arrangement giving the lessee temporary use of the property, with continued ownership of the property by the lessor.
  • Times interest earned ratio – A solvency measure that indicates a company’s ability to meet interest payments; computed by dividing income before income taxes and interest expense by interest expense.
  • Effective-interest method of amortization – A method of amortizing bond discount or bond premium that results in periodic interest expense equal to a constant percentage of the carrying value of the bonds.
  • Straight-line method of amortization – A method of amortizing bond discount or bond premium that results in allocating the same amount to interest expense in each interest
  • period.
  • Consolidated financial statementsFinancial statements that present the assets and liabilities controlled by the parent company and the total revenues and expenses of the subsidiary companies.
  • Controlling interest – Ownership of more than 50% of the common stock of another entity.
  • Cost method – An accounting method in which the investment in common stock is recorded at cost, and revenue is recognized only when cash dividends are received.
  • Equity method – An accounting method in which the investment in common stock is initially recorded at cost, and the investment account is then adjusted annually to show the investor’s equity in the investee.
  • Fair value – Amount for which a security could be sold in a normal market.
  • Subsidiary (affiliated) company – A company in which more than 50% of its stock is owned by another company.