1. Bond Issuer (Borrower) Trustee Bond Holder (Lender or Investor) General Public Financial Intermediary Corporation or Government Bond Certificates are exchanged $1,000 $10,000 $100,000 Bond Issue $1,000,000 Bond Indenture: Face Value – PAR Value, maturity Value Stated Rate – Contract Rate, Coupon Rate Maturity in Years Semi-Annual or Annual Interest Payments Not in Bond Indenture: Purchase Price or Value of the Bond Market Rate – Effective Interest Rate, Yield

2. Parties to a Bond Issue Bond Issuer [Corporation or Government Entity] **Borrows money from the general public by issuing (selling) Bond Certificates. **Expected to return the Face Value of the Certificate to the bondholder at maturity **Expected to pay interest to the bondholders over the life of the bond certificates Bondholder [Investor] **Lends money to Bond Issuer by purchasing Bond Certificates **Expects Face Value of Certificate in return at maturity **Expects Interest over the Life of the Bond Certificate in return

3. Types of Bonds Debenture – an unsecured bond Callable Bonds – gives the issuer the right to call and retire the bonds prior to maturity Convertible Bonds – may be converted to Common Stock (or some other security of the corporation) at option of bondholder Redeemable Bonds – may be retired early at option of bondholder