Types of bond ownership outline

Types of bond ownership outline

Bearer bond

·        Owned by person who holds/bears them

·        Possession is 100% of the law

·        Names are not on books of issuer

·        Holder of bond is owner

·        End of issuing: January 1, 1983

·         Minimum: Issued in $1,000 increments

·        Commonly issued in $5,000 increments

Registered bonds

·        Owner-registered with issuer

·        Interest payments sent to registered person

·        Issued in $5,000 denominations

·        Minimum: : Issued in $1,000 increments

Book entry bonds

·        Ownership registered electronically

·        Issuer makes principal and interest payments to bondholder via trustee

·        Owner doesn’t hold certificate

·        Sold in $5,000 increments

·        Can’t be lost

·        Investors must keep confirmation slip to show they have ownership

·        1983, bonds are fully registered or book entry form only

·        Because many bonds lost, only book-entry available

Which of the following describes a book entry bond?

·        The owners of the bonds are on the books of the trustee but they have no certificate to show for the bonds. In 2000, 90% of bonds were book entry