This document presents information on bonds. It begins with definitions of a bond, including that a bond is a long-term contract where a borrower agrees to pay interest and return the principal to holders on specific dates. The document then discusses characteristics of bonds such as par value, coupon interest rate, and maturity date. It also covers various types of bonds like zero coupon bonds, floating rate bonds, perpetual bonds, and others. In total, the document provides an overview of what bonds are and various bond types.

1. Welcome To The
Presentation On
Bonds
Presented by:
Hari krishna.D
Venkata subhramanyam
Naveen kumar.M

2. CONTENTS
What is bond?
Definition of bonds
Meaning of bond
Characteristics of bonds
Features of bonds
Types of bonds

3. BOND
A long term contract under
which a borrower agrees to
make payments of interest and
principal on specific date, to the
holders of the bond

4. Definition
A written and signed promise
to pay a certain sum of money
on a certain date, or on
fulfillment of a specified
condition. All documented
contracts and loan
agreements are bonds.

5. Meaning
A debt investment in which an investor loans money to an
entity (corporate or governmental) that borrows the funds
for a defined period of time at a fixed interest rate. Bonds
are used by companies, municipalities, states and U.S.
and foreign governments to finance a variety of projects
and activities.
Bonds are commonly referred to as fixed-income
securities and are one of the three main asset classes,
along with stocks and cash equivalents.

6. Characteristics of a Bond
Par Value
the stated face value of a bond
Coupon Interest Rate
the fixed “rate of interest” which remains the same
throughout the life of the bond
Maturity Date
Specified maturity date on which par value must be
paid
Call Option
It gives the issuer the opportunity to repurchase the
bonds prior to maturity

7. Features of a Bond
Principal
Nominal, principal, par or face amount — the amount on which the issuer
pays interest, and which, most commonly, has to be repaid at the end of the
term
Maturity
The issuer has to repay the nominal amount on the maturity date. As long as
all due payments have been made, the issuer has no further obligations to the
bond holders after the maturity date. The length of time until the maturity date is
often referred to as the term or tenor or maturity of a bond.
Coupon
The coupon is the interest rate that the issuer pays to the bond holders.
Usually this rate is fixed throughout the life of the bond. Interest can be paid at
different frequencies: generally semi-annual, i.e. every 6 months, or annual
Yield
The yield is the rate of return received from investing in the bond

8. Types of Bonds
Floating Rate Bonds
Zero Coupon Bonds
Perpetual Bonds
Convertible Bonds
High-Yield Bonds
Corporate Bonds:
Government Bonds
Inflation-indexed (or inflation-linked) Bonds
Extendible and Retractable Bonds
Municipal bonds

9. Zero Coupon Bonds
The issue price of Zero Coupon Bonds is inversely related
to their maturity period, i.e. longer the maturity period lesser
would be the issue price and vice-versa. These types of
bonds are also known as Deep Discount Bonds
Floating Rate Bonds:
Floating Rate Notes are bonds in which interest rate
depends on the interest rate prevailing in the market. The
interest rate paid to the bondholder at regular intervals
comprises of the interest rate prevailing in the market and
‘spread’, which is a rate that is fixed when the prices of the
bond are being fixed and it remains constant till the maturity
period of the bond.

10. Perpetual Bonds:
Perpetual Bonds, which are also known as the name of
Consol, are the bonds which have no maturity period and
keep on paying interest to the investors regularly. The
issuer of Perpetual Bonds is not required to redeem these
bonds. They are generally treated as equity and not as loan
/ debt.
Convertible Bonds:
1. The holder of a convertible bond has the option to convert
the bond into equity (in the same value as of the bond) of
the issuing firm (borrowing firm) on pre-specified terms.
2. Convertible bonds may be fully or partly convertible. For
the part of the convertible bond which is redeemed, the
investor receives equity shares and the non-converted
part remains as a bond.

11. High-Yield Bonds:
High yield (non-investment grade) bonds are from issuers
that are considered to be at greater risk of not paying
interest and/or returning principal at maturity. As a result, the
issuer will offer a higher yield than a similar bond of a higher
credit rating and, typically, a higher coupon rate to entice
investors to take on the added risk.
Corporate Bonds:
These are issued by large corporations and have higher
yields because there is a higher risk of a company
defaulting as compared to government bonds.

12. Government Bonds:
These are the bonds issued by government in its own
currency. They are usually referred to as risk-free bonds.
Bonds issued by national governments in foreign
currencies are referred to as sovereign bonds.
Inflation-indexed (or inflation-linked)
Bond:
It provides protection against inflation, and is designed to
cut out the inflation risk of an investment.

13. Extendible and Retractable Bonds:
 Extendible and Retractable bonds have no fixed maturity
date.
 While the maturity period of extendible bonds can be
extended on the demand of the buyer of these bonds, the
maturity period of retractable bond can be reduced and the
principal amount returned to the buyer if he feels so.
Treasury Bond –( T-Bond):
A marketable, fixed-interest U.S. government debt security
with a maturity of more than 10 years. Treasury bonds make
interest payments semi-annually and the income that holders
receive is only taxed at the federal level.

14. Municipal Bond:
A debt security issued by a state, municipality or county to
finance its capital expenditures. Municipal bonds are
exempt from federal taxes and from most state and local
taxes, especially if you live in the state in which the bond is
issued.
Foreign Bond:
A bond that is issued in a domestic market by a foreign
entity, in the domestic market's currency. A foreign bond is
most often issued by a foreign firm to raise capital in a
domestic market that would be most interested in
purchasing the firm's debt. For foreign firms doing a large
amount of business in the domestic market, issuing foreign
bonds is a common practice.
Types of foreign bonds include bulldog bonds, matilda