§ 103504 Bond Interest And Redemption

This law says bonds can earn up to 7% interest a year, paid twice a year, and sets rules for how they’re issued, called early, and signed.

Key Takeaways

•Interest can’t be higher than 7% per year.
•Interest is paid twice a year, but the first payment can cover up to one year.
•Bonds must be at least $5,000 in value.
•Early call or redemption is only allowed if the bond says so.
•One signature on the bond must be handwritten; the rest can be printed.

Example

A city sells a $10,000 bond that promises 6% interest per year.

The bond will pay interest twice a year. Each payment is half of the yearly interest, so the city pays $300 every six months. The city must also follow the signing and denomination rules in the law.

How to Calculate

Interest per payment = Principal × (Annual Rate ÷ 2)

Find the bond’s principal amount (the money borrowed).
Find the annual interest rate (must be 7% or less).
Divide the annual rate by 2 because interest is paid semiannually.
Multiply the principal by the result from Step 3 to get each payment amount.

City issues a $10,000 bond with a 6% annual rate.

Result: Interest per payment = 10,000 × (0.06 ÷ 2) = 10,000 × 0.03 = 300 dollars each six months.

The bonds shall bear interest at a rate or rates not exceeding 7 percent per annum, payable semiannually, except that the first interest payable on the bonds, or any series thereof, may be for any period not exceeding one year as determined by the board. In the resolution or resolutions providing for the issuance of such bonds, the board may also provide for call and redemption of such bonds prior to maturity at such times and prices and upon such other terms as it may specify, provided that no bond shall be subject to call or redemption prior to maturity unless it contains a recital to that effect or unless a statement to that effect is printed thereon. The denomination or denominations of the bonds shall be stated in the resolution providing for their issuance, but shall not be less than five thousand dollars ($5,000). The principal of, and interest on, such bonds shall be payable in lawful money of the United States at the office of the treasurer of the district. The bonds, or such series thereof, shall be dated and numbered consecutively and shall be signed by the chairman of the board and the treasurer. All such signatures, countersignatures, and seal may be printed, lithographed, or mechanically reproduced, except that one of such signatures or countersignatures on the bonds shall be manually affixed. If any officer whose signature or countersignature appears on bonds or coupons ceases to be such officer before the delivery of the bonds, his signature is as effective as if he had remained in office. (Added by Stats. 1974, Ch. 502.)

This law says bonds can earn up to 7% interest a year, paid twice a year, and sets rules for how they’re issued, called early, and signed.

Key Takeaways

•Interest can’t be higher than 7% per year.
•Interest is paid twice a year, but the first payment can cover up to one year.
•Bonds must be at least $5,000 in value.
•Early call or redemption is only allowed if the bond says so.
•One signature on the bond must be handwritten; the rest can be printed.

Example

A city sells a $10,000 bond that promises 6% interest per year.

The bond will pay interest twice a year. Each payment is half of the yearly interest, so the city pays $300 every six months. The city must also follow the signing and denomination rules in the law.

How to Calculate

Interest per payment = Principal × (Annual Rate ÷ 2)

Find the bond’s principal amount (the money borrowed).
Find the annual interest rate (must be 7% or less).
Divide the annual rate by 2 because interest is paid semiannually.
Multiply the principal by the result from Step 3 to get each payment amount.

City issues a $10,000 bond with a 6% annual rate.

Result: Interest per payment = 10,000 × (0.06 ÷ 2) = 10,000 × 0.03 = 300 dollars each six months.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 103504 Bond Interest And Redemption

Key Takeaways

Example

How to Calculate

Key Terms

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References