TYPES OF BONDS There are a plenty amount of different types of bonds‚ existing nowadays. Actually‚ the bond market offers investors a lot more choices than the stock market. Which bonds to choose depends on the goals‚ tax situation and the risk tolerance of a person who is going to invest in bonds. The broad bond market includes in itself government‚ municipal‚ corporate‚ mortgage-backed or asset-backed securities and international bonds. Within each broad bond market sector it is possible to
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Lyons Document Storage Corporation: Bond Accounting In December 2008 Rene Cook sat in her cubicle trying to remember what she had learned in business school about bonds and bond accounting. Ms. Cook‚ a new MBA and special assistant in a training assignment with the company president‚ had just met with David Lyons‚ president of Lyons Document Storage Corporation. He had asked her to think about the possible consequences of repurchasing company bonds outstanding using cash that he felt could
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Bond Case Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and co-directors of the company’s pension fund management division. An important new client‚ The North-Western Municipal Alliance‚ has requested that Mutual of Seattle present an investment seminar to the mayors of the represented cities‚ and Strother and Tibbs‚ who will make the actual presentation‚ have asked you to help them by answering the following questions. What are the key features of a
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Introduction to Bond Market A financial market place where debt instruments‚ primarily bonds‚ are bought and sold is called a bond market. The dealings in a bond market are limited to a small group of participants. Contrary to stock or commodities trading‚ the bond market (also known as the debt market) lacks a central exchange. The bond market (also known as the credit‚ or fixed income market) is a financial market where participants can issue new debt‚ known as the primary market‚ or buy and
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of Bonds Fixed rate bonds have a coupon that remains constant throughout the life of the bond. A variation are stepped-coupon bonds‚ whose coupon increases during the life of the bond. Zero-coupon bonds (zeros) pay no regular interest. They are issued at a substantial discount to par value‚ so that the interest is effectively rolled up to maturity (and usually taxed as such). The bondholder receives the full principal amount on the redemption date. High-yield bonds (junk bonds) are bonds that
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BONDS Bonds pay fixed coupon (interest) payments at fixed intervals (usually every six months) and pay the par value at maturity. Par value = $1‚000 Coupon = 6.5% or par value per year‚ or $65 per year ($32.50 every six months). Maturity = 28 years (matures in 2032). Issued by AT&T. Types of Bonds Debentures - unsecured bonds. Subordinated debentures - unsecured “junior” debt. Mortgage bonds - secured bonds. Zeros - bonds that pay only par value at maturity; no coupons. Junk bonds - speculative or
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VALUATION AND MANAGEMENT OF BONDS All Rights Reserved © Oxford University Press‚ 2011 2 CONTENTS Introduction Features of the bond Face Value l Coupon Rate Periodicity of coupon payments Maturity Redemption Value Fixed and Floating Rate Bonds Indexed Bonds Callable & Puttable Bonds C ll bl & P tt bl B d Zero Coupon and Deep Discount Bonds Convertible Bonds CHAPTER 6 Types of Bonds Types of Bonds Cash Flow of the bond VALUATION & MANAGEMENT OF BONDS 3
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activities of the corporation are entrusted to them. Guaranteed Stocks-Stock of corporation wherein the payment of dividends is guaranteed by another corporation. Debenture Stock- not stock in the real sense‚ but a debt issue similar to debenture bonds. They are fixed interest securities issued by limited
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Value of Money to Security Valuation – Valuation of Bonds and Debt Securities A bond or a debenture is a long term debt instrument carrying a fixed rate of interest which is known to investors. A bond is redeemable after a specified period. Bonds are also called gilt edged securities or gilt when issued by the government since it is free of default risk. Features of a Bond or Debenture • Face Value – Face value is called par value. A bond / debenture is generally issued at a par value and
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main advantages and disadvantages of CAT bonds compared to (re)insurance from the perspective of the party seeking protection. The first main advantage of CAT bond compared to reinsurance‚ in terms of the party seeking protection‚ the Sponsor‚Munich Re in our case‚ is that CAT bond ‚which is Queen Street II Captial Ltd in our case ‚allows the Munich Re to transfer the catastrophe risks (North Atlantic U.S.hurricane and European windstorms) to the CAT bond investors via SPRV‚ Queen Street II Capital
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