Analysis of Bonds Market
PIMCO analysis of bond markets
This analysis gives investors thorough information about bond markets and provides an overview risks faced by bondholders.
Purchasing a bond means you are lending money to a government, whereby the issuer provides a bond in which promises to a specified interest rate during the bond’s life. The capital value will be repaid at the time of investment when a bond reaches maturity. Therefore, it is suitable for those investors who seek a predictable income with a guaranteed return. It is viewed as safe-haven investments with the government backing and low risk. It is widely used by the Government to raise funds when public expenditure exceeds public income. This government bond is known as gilt in the UK.
There are certain features need to be considered in appraising bond investment. First, par value, the amount will be received by holder at the bond’s maturity. Second, bond issuers are either governments or international organizations. Third, maturity dates, the date on which the issuer has to pay the nominal amount. The issuer has no more obligations to the bondholders after the maturity date as long as payments have been made. Fourth, coupon, the interest rate that the issuer pays to the bondholders. which usually fixed. Fifth, coupon dates, the dates on which the issuer pays the coupon to the bondholders, which usually paid annually or semi-annually. Sixth, yield is the return rate of investing the bond. There are two types of yield, current yield, simply the annual interest payment divided by the current market price and yield to maturity, concerning current market price and the timing of all remaining coupon payments and of the repayment due on maturity. Seventh, credit rating, it portrays the quality of the issue refers to the profitability that the bondholders will receive the amounts promised at the due dates.
Generally, the government bonds are valued in increments of 100 and have a certain maturity period.
This analysis gives investors thorough information about bond markets and provides an overview risks faced by bondholders.
Purchasing a bond means you are lending money to a government, whereby the issuer provides a bond in which promises to a specified interest rate during the bond’s life. The capital value will be repaid at the time of investment when a bond reaches maturity. Therefore, it is suitable for those investors who seek a predictable income with a guaranteed return. It is viewed as safe-haven investments with the government backing and low risk. It is widely used by the Government to raise funds when public expenditure exceeds public income. This government bond is known as gilt in the UK.
There are certain features need to be considered in appraising bond investment. First, par value, the amount will be received by holder at the bond’s maturity. Second, bond issuers are either governments or international organizations. Third, maturity dates, the date on which the issuer has to pay the nominal amount. The issuer has no more obligations to the bondholders after the maturity date as long as payments have been made. Fourth, coupon, the interest rate that the issuer pays to the bondholders. which usually fixed. Fifth, coupon dates, the dates on which the issuer pays the coupon to the bondholders, which usually paid annually or semi-annually. Sixth, yield is the return rate of investing the bond. There are two types of yield, current yield, simply the annual interest payment divided by the current market price and yield to maturity, concerning current market price and the timing of all remaining coupon payments and of the repayment due on maturity. Seventh, credit rating, it portrays the quality of the issue refers to the profitability that the bondholders will receive the amounts promised at the due dates.
Generally, the government bonds are valued in increments of 100 and have a certain maturity period.
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