Advance Refunding:
Callable Bond:
A bond that can be redeemed by the issuer prior to its maturity. Usually a premium is paid to the bond owner when the bond is called.
Certificate of Participation (COP):
Financing whereby an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Usually issued by authorities through which capital is raised and lease payments are made. The authority usually uses the proceeds to construct a facility that is leased to the municipality, releasing the municipality from restrictions on the amount of debt that they can incur.
Discount Bond:
A bond that is valued at less than its face amount.
Double Barreled:
Bonds secured by the pledge of two or more sources of repayment.
Face Value:
The stated principal amount of a bond. Also called par value. Bond issued below this price are called below par and the ones which are issued above the face value, are called above par.
Par Value:
The face value of a bond, generally $1,000.
Premium Bond:
A bond that is valued at more than its face amount.
Principal:
The amount owed; the face value of a debt.
Revenue Bonds:
Bonds secured by the revenues derived from a particular service provided by the issuer.
Sinking Fund:
A bond with special funds set aside to retire the term bonds of a revenue issued each year according to a set schedule. Usually takes effect 15 years from date of issuance. Bonds are retired through calls, open market purchases, or tenders.
Yield:
A measure of the income generated by a bond. The amount of interest paid on a bond divided by the price.
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