This document provides information on corporate bonds and bond investing. It defines corporate bonds as a corporation's written pledge to repay a specified amount of money with interest on a maturity date. It discusses why corporations issue bonds, including to get funds for major purchases, improve financial leverage, and fund ongoing business activities. The document also covers types of bonds, provisions for repayment like call features and sinking funds, how to evaluate bonds using the internet, annual reports, bond ratings, and yield calculations. It provides information on government bonds at the federal, state, and local level.

1. ROLEPLAY

2. Financial Adviser

3. Investor Of Equity Share & real estate

4. Investor Of Real Estate

5. Investor In Mutual Fund

6. Advisor Of Bonds

7. Investing In Bonds

8. Corporate Bonds

9. 1
2
3
4
5
Characteristics of Corporate Bonds9
Maturity Date
“Corporation’s written
pledge to repay a
specified amount of
money with interest.”
Interest Payments
Face Value
Bond Indenture
Trustee

10. Why corporations issue bonds10
1
To get funds for
major purchases.
2
To improve financial
leverage
3
To fund ongoing
business activities
4
Interest paid to
bondholders is a tax
deductible business
expense
5
When it is difficult or
impossible to sell
stock

11. TYPES OF BONDS11
Debenture bond
Mortgage bond
Subordinated
debenture bond
Convertible bond
High Yield bond
1
2
3
4
5

12. PROVISIONS OF REPAYMENT12
Call Feature
Corporation can call in or buy back outstanding bonds from
current bondholders before the maturity date
Sinking fund
Corporations deposit money in this fund annually or semiannually
and use the money to pay off the bondholders when the bond issue
comes due
Serial bonds
Bonds of a single issue that mature on different dates

13. Bonds can be held
until maturity or sold in
the secondary market.
MECHANICS OF A BOND TRANSACTION
13
Most bonds sold
through full-service
brokerage firms,
discount brokerage
firms, or the Internet.
Generally a minimum
commission of $5-$35
on a $1,000 bond.
Bonds are taxable.
1
2
3
4

14. Government Bonds
and Debt Securities

15. Three levels15
State
Federal
Local municipalities
1
2
3
Government Bonds and Debt Securities

16. Federal Securities
16
Treasury Bills
Treasury Notes
Treasury Bonds
Treasury Inflation
Protected Securities
Federal Agency
Debt Issues
– Federal National
Mortgage Association
– Government National
Mortgage Association
– Federal Home Loan
Mortgage Corporation

17. STATE AND LOCAL GOVERNMENT SECURITIES
17
Municipal bonds
– Issued by a state or local government
– Use funds for ongoing costs & to build major projects
Features of Municipal Bond
– People like to invest in projects close to home
‒ They like insured municipal bonds that guarantee payment
‒ It May be callable
‒ Earning is higher (depends on use of funds)

18. EVALUATE BONDS18
1
INTERNET
2
ANNUAL REPORTS
3
BOND
RATINGS
4
BOND YIELD
CALCULATIONS

19. INTERNET19
It can be used in the following ways…….
– Obtain the price information
– Trade bonds online for a lower commission
– Research information on the corporation or
government bond issues online
Some relevant Websites are……..
– http://www.bonds-online.com/
– http://www.emuni.com/
– http://www.buysellbonds.com/
– http://www.fmsbonds.com/
– http://www.municipalbonds.com/
– http://www.investinginbonds.com/

20. 20
ANNUAL REPORTS
Corporations maintain web site that provides access to annual
reports
BOND RATINGS
• Bond ratings provide quality and risk associated with bond issues
• Moody’s Investor Service Inc., Standard & Poor’s Corporation, and
Fitch ratings provide bond ratings
• Bond ratings generally range from AAA to D

21. 21

22. BOND YIELD CALCULATIONS
Current yield on corporate bond =
Annual income amount
Current market value
Yield to Maturity Calculation=
$ Amt. Annual Interest + Face value - Market value
Number of periods
Market value + Face value
2

23.  Thank you! That’s all!
PREPARED BY : HARDIK SHAH
ANIKTA TALPARA
PRIYANKA MANIYAR
ISHITA VORA
ANKIT VORAGUIDED BY: (Dr.) NAVJYOT RAVAL