1.

DEBT SECURITIES
a. Maturities
i. On the maturity date the loan principal is repaid to the investor
1. Term Maturity
a. Structured so that principal of the whole issue matures at
once
2. Serial Maturity
a. Schedules portion of the principal to mature at intervals
over a period of years until the entire baance has been
repaid
3. Balloon Maturity
a. Uses elementes of both seral and term maturities
4. Series Issues
a. Instead od putting all bonds out in the market, the bond
issue may spread out the borrowing voer severl years
b. Bond Certificate
i. Registration of bonds has been common in US since 1970s
1. Bearer Bonds
a. No longer issued
b. Issuers kept no records of purchasers
c. Were not registered so whoever owned them could collect
intern, sell or redeem bonds
2. Registered Bonds
a. Fully Registered
i. Transfer agent maintains a list of bondholders and
updates this list as bond ownership changes
ii. Interest payments are automatically sent to
bonholders
b. Registered to Pricnipal Only
i. No longer issued
c. Book Entry Bonds
i. Owners dont receive certificates
ii. Most US Gov bonds are available only in book entry
form
iii. Transfer agent maintains seuirtys ownership
records
c. Ratings and Analyzing Bonds
i. Relationship of Rating to Yield
1. Higher the bond rating, the lower the yield
ii. Safety of Debt Securities
1. US safest
2. Government Agency Issues
a. US gov ddoes not back the seucirites except for GInnie
Mae
 3. Municipals
a. General obligation bonds, backed by the taxing power of
the issue, usually safer than revenue bonds
i. Revenue bonds are backed by reveneus from the
facility finaced by the bond issue
4. Corporate Debt
a. Secured Bonds (safest)
b. Debentures
c. Subordianted debentrues
d. Income bonds (riskiest)
d. Debt Retirement
e.