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Series 7 Exam For Dummies, Premier Edition with CD, 2nd Edition by Steven M. Rice

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Chapter 7

Debt Securities: Corporate and U.S. Government Loans

In This Chapter

arrow Understanding the specifics on bonds

arrow Examining securities issued by the U.S. government

arrow Looking at short-term bonds

arrow Reviewing additional topics tested

Instead of giving up a portion of their company (via stock certificates), corporations can borrow money from investors by selling bonds. Local governments (through municipal bonds) and the U.S. government also issue bonds. For Series 7 exam purposes, most bonds are considered safer than stocks.

Bondholders aren’t owners of a company like stockholders are; they’re creditors. Bondholders lend money to an institution for a fixed period of time and receive interest for doing so. This arrangement allows the institution to borrow money on its terms (with its chosen maturity date, scheduled interest payments, interest rate, and so on), which it can’t do by borrowing from a lending institution.

The Series 7 exam tests you on your ability to understand the different types of bonds issued, terminology, and yes, some math. This chapter has you covered in topics relating ...

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