Question

Define each word:

1. Debenture.

2. Callable bond.

3. Convertible bond.

4. Cumulative dividends.

5. Nasdaq composite index.

6. Wilshire 5000 index.

7. Nikkei.

Answer 1

1. Debenture

Debenture is an unsecured long term debt. Since it is unsecured, so rate of interest on debenture is high as compare to another type of long term debt.

2. Callable bond

in this type of bond, the issuer has right to call the bond or repay the loan before the maturity of bond.

3. Convertible bond

In this type of bond, the lender can convert the bond into stock of company after specified period of time in specified number of stock.

4. Cmulative Dividend

Cumulative preferred stock generally pays fixed dividend, received first primary in dividend payment and maintains the right to dividend payment, even if payment is deferred. in any finnacial if company does not perform well then it does not pays dividend but dividend amount is accumulate in next financial period.