What Are Bond Rating Agencies? Bond rating agencies are companies that assess the creditworthiness of both debt securities and their issuers. These agencies publish the ratings used by investment professionals to determine the likelihood that the debt will be repaid. Key Takeaways Bond rating agencies are companies that assess the creditworthiness of both debt securities
What Is the Bond Ratio? The bond ratio is a financial ratio that expresses the leverage of a bond issuer by examining the value of bonds outstanding and when they come due. Leverage refers to any borrowed capital, such as debt issued in the form of bonds or other debts. Key Takeaways The bond ratio
What Is a Bond Resolution? A bond resolution is a document where the issuer authorizes a bond’s issuance and sale, along with defining the rights of the respective parties to the bond contract, namely the issuer and the bondholder. Key Takeaways A bond resolution is a document that details and authorizes the issuance of bonds
What Is a Bond Swap? A bond swap consists of selling one debt instrument and using the proceeds to buy another debt instrument. Investors engage in bond swapping with the goal of improving their financial positions within a fixed-income portfolio. For example, bond swapping can reduce an investor’s tax liability, give an investor a higher
What Is a Bond Trustee? A bond trustee is a financial institution that is granted trust powers, such as a commercial bank or trust company. This entity, in turn, has a fiduciary duty to the bond issuer to enforce the terms of a bond indenture. A trustee sees that bond interest payments and principal repayments
What is a Bond Violation A bond violation is a breach of the covenants of a bond. A bond covenant is a legally binding term of the agreement between a bond issuer and a bondholder. Bond covenants are designed to protect the interests of both parties. The inclusion of the covenant is in the bond’s indenture
What Is a Bonus? A bonus is a financial compensation that is above and beyond the normal payment expectations of its recipient. Companies may award bonuses to both entry-level employees and to senior-level executives. While bonuses are traditionally given to exceptional workers, employers sometimes dole out bonuses company-wide to stave off jealousy among staffers. Bonuses
What Is Bonus Depreciation? Bonus depreciation is a tax incentive that allows a business to immediately deduct a large percentage of the purchase price of eligible assets, such as machinery, rather than write them off over the “useful life” of that asset. Bonus depreciation is also known as the additional first-year depreciation deduction. Key Takeaways
What is a Bonus Issue? A bonus issue, also known as a scrip issue or a capitalization issue, is an offer of free additional shares to existing shareholders. A company may decide to distribute further shares as an alternative to increasing the dividend payout. For example, a company may give one bonus share for every
What is Book Building? Book building is the process by which an underwriter attempts to determine the price at which an initial public offering (IPO) will be offered. An underwriter, normally an investment bank, builds a book by inviting institutional investors (such as fund managers and others) to submit bids for the number of shares
