What are the four types of serial bonds?

Terms in this set (4)

• Regular Serial Bonds. Total principal of an issue is repayable in a specified number of equal annual installments over the life of the issue.
• Deferred Serial Bonds.
• Annuity Serial Bonds.
• Irregular Serial Bonds.

  What is the total amount of serial bonds?

  A serial bond is a bond issuance where a portion of the total number of bonds are paid off each year. This results in a gradual decline in the total amount of the issuer’s debt outstanding. For example, a $1,000,000, ten-year serial bond will have $100,000 of bonds mature once a year for ten years.

  How are bond terms calculated?

  To figure out the total interest paid, you take the face value of the bond, multiply it by the coupon interest rate, and then multiply that by the number of years corresponding to the term of the bond. For instance, say a company issues a five-year bond with a face value of $1,000 and a 2% interest rate.

  How are serial bonds quoted?

  It would be very cumbersome to quote different market prices for each of the maturities within an issue. Instead, serial bonds are quoted on a “vield basis.” also known as a basis quote.

  What is the difference between a term bond and a serial bond?

  Term bonds are bonds which mature or come due on a single date. Serial bonds are bonds which do not mature or come due on a single date. Instead, serial bonds have maturity dates which are staggered over several or many years. You could say that serial bonds come due over a series of dates.

  What is a sinking bond?

  Definition: A sinking fund bond is a bond that requires the issuer to set aside a specific amount of assets on certain dates to repay bondholders. In other words, it’s a bond that requires the issuing entity to create a sinking fund to be used as collateral in case the issuer can’t pay the bondholders in the future.

  Are serial bonds current liabilities?

  Serial bonds are reported on the balance sheet of the bond issuer as a long-term liability. Conversely, the bondholder reports these investments on its balance sheet as a current or non-current receivable in the asset section.

  What’s the difference between a term bond and a serial bond?

  How do serial bonds mature?

  A serial bond is a multiple debt issue that matures at staggered intervals before all segments finally mature. Serial bonds do not utilize sinking funds, and instead rely on the revenues generated from the project that the bond is used to fund, making them popular for certain municipal bonds.

  What’s the difference between term bonds and serial bonds?

  Can a serial bond be retired at the same time?

  Although serial bonds cannot necessarily be retired at the discretion of the issuer, the issuer may be permitted, on some occasions, to retire the debt at the same time. Serial bonds are distinguished from term bonds in which the bonds in an issue have the same maturity date.

  Can a bond be structured for serial maturity date?

  If the bond issuer believes that the facility can generate income consistently each year, it can structure the bond for serial maturity dates. As the total amount of bonds outstanding decreases, the future risk on the bond issue defaulting also declines.

  When is the first payment on a serial bond?

  In addition, as a serial bond, the first payment of the face value is made at the end of Year One and shown in Figure 14.22 “December 31, Year One—Payment on Face Value of Serial Bond”. Whether a long-term liability is a term bond or a serial bond, the accounting process is the same.