Study Notes: Corporate Bonds

Chapter 17. Corporate Bonds Study Notes contain 24 pages covering the following learning objectives:

* Describe features of bond trading, and explain the behavior of bond yield.
* Describe a bond indenture and explain the role of the corporate trustee in a bond indenture.
* Define high-yield bonds, and describe types of high-yield bond issuers and some of the payment features unique to high yield bonds.
* Differentiate between credit default risk and credit spread risk.
* Describe event risk and explain what may cause it in corporate bonds.
* Describe the different classifications of bonds characterized by issuer, maturity, interest rate, and collateral.
* Describe the mechanisms by which corporate bonds can be retired before maturity.
* Define recovery rate and default rate, differentiate between an issue default rate and a dollar default rate, and describe the relationship between recovery rates and seniority.
* Evaluate the expected return from a bond investment and identify the components of the bond’s expected return.

After reviewing the notes, you will be able to apply what you learned with practice questions.

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