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Definition
Explanation
Bond terminology
How bond work?
Types of bonds
BOND is a debt instrument in which an
investor loans money to an entity (corporate
or governmental) that borrows the fund for a
defined period of time at a fixed interest rate.
WHILE
Prize bond is a lottery bond a non interest
bearing security issued to public.
• Bond is a debt security in which authorized
issuer owes the holders a debt.
• It is a formal contact to repay borrowed
money with interest at fixed intervals.
• Plays an important role in mobilization of
capital.
FACE VALUE: The price of a bond when first
issued.
COUPON RATE: The periodic interest
payments promised to bondholders are a
fixed percentage of bonds face value OR
simply the interest rate.
MATURITY: The time until the principal is
scheduled to be repaid.
CALL PROVISIONS: some bonds contain a
provision which enables the issuer to buy the
bond back from the bondholder at a pre-
specified price.
PUT PROVISION: Some bonds contain a
provision due to which the buyer can sell the
bond at a pre-specified price before its
maturity date.
BONDS ISSUED ( GOVT/
CORPORATION)
FOR A SPECIFIED
PERIOD
INTEREST RATE
APPLIEDRETURNED AT
MATURITY
DATE ( depend)
TREASURY BONDS: issued by US govt. to finance
its deficits. These are free of default risk.
CORPORATE BONDS: Issued by corporation.
There is a high risk because of a company
defaulting.
• CONVERTIBLE BONDS: These bonds can be
converted into a certain number of shares of the same
company at some fixed ratio in a particular date.
• CALLABLE BONDS: contain a provision that gives
the issuer the right to call back the bond before its
maturity date.
SECURED BONDS: have specific assets of the
issuer pledged as collateral for the bond. A
bond can be secured by real estate or other
assets.
UNSECURED BONDS: are not backed by any
specific asset of issuer. More easily issued by
a company that is financially sound.
GOVERNMENT BONDS: issued by govt. in its own
currency risk free bonds. When issued in
foreign currency then a referred as
sovereign bonds.
TERM BONDS: That mature at a single
specified future date.
SERIAL BONDS: Bonds that mature in
installments.
INFLATION LINKED BONDS: It provides
protection against inflation and is designed
to cut out the inflation risk of an investment.
EXTENDIBLE & RETRACTABLE BONDS: Have no
fixed maturity date. Extendible can be
extended on demand of buyer while in
retractable the date can be reduced.
ZERO COUPON BONDS: a type of bond that
makes no coupon payments but instead is
issued at a considerable discount to par
value.e.g: zero coupon bond with 1000$ par
value and 600$ to 10 years maturity date.
You’d be paying 600$today for a bond worth
1000 in 10 years.(longer the maturity period
lesser would be the issue price vice versa).
Apart from the benefits of investment in
bonds there are also some risks subjected to
bonds such as :
• inflation risk, interest rate risk, foreign
exchange risk and call back risk etc
presentation on bonds...its types,method and bond terminologies.

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presentation on bonds...its types,method and bond terminologies.

  • 2.
  • 4. BOND is a debt instrument in which an investor loans money to an entity (corporate or governmental) that borrows the fund for a defined period of time at a fixed interest rate. WHILE Prize bond is a lottery bond a non interest bearing security issued to public.
  • 5. • Bond is a debt security in which authorized issuer owes the holders a debt. • It is a formal contact to repay borrowed money with interest at fixed intervals. • Plays an important role in mobilization of capital.
  • 6. FACE VALUE: The price of a bond when first issued. COUPON RATE: The periodic interest payments promised to bondholders are a fixed percentage of bonds face value OR simply the interest rate. MATURITY: The time until the principal is scheduled to be repaid.
  • 7. CALL PROVISIONS: some bonds contain a provision which enables the issuer to buy the bond back from the bondholder at a pre- specified price. PUT PROVISION: Some bonds contain a provision due to which the buyer can sell the bond at a pre-specified price before its maturity date.
  • 8. BONDS ISSUED ( GOVT/ CORPORATION) FOR A SPECIFIED PERIOD INTEREST RATE APPLIEDRETURNED AT MATURITY DATE ( depend)
  • 9.
  • 10. TREASURY BONDS: issued by US govt. to finance its deficits. These are free of default risk. CORPORATE BONDS: Issued by corporation. There is a high risk because of a company defaulting. • CONVERTIBLE BONDS: These bonds can be converted into a certain number of shares of the same company at some fixed ratio in a particular date. • CALLABLE BONDS: contain a provision that gives the issuer the right to call back the bond before its maturity date.
  • 11. SECURED BONDS: have specific assets of the issuer pledged as collateral for the bond. A bond can be secured by real estate or other assets. UNSECURED BONDS: are not backed by any specific asset of issuer. More easily issued by a company that is financially sound. GOVERNMENT BONDS: issued by govt. in its own currency risk free bonds. When issued in foreign currency then a referred as sovereign bonds.
  • 12. TERM BONDS: That mature at a single specified future date. SERIAL BONDS: Bonds that mature in installments. INFLATION LINKED BONDS: It provides protection against inflation and is designed to cut out the inflation risk of an investment. EXTENDIBLE & RETRACTABLE BONDS: Have no fixed maturity date. Extendible can be extended on demand of buyer while in retractable the date can be reduced.
  • 13. ZERO COUPON BONDS: a type of bond that makes no coupon payments but instead is issued at a considerable discount to par value.e.g: zero coupon bond with 1000$ par value and 600$ to 10 years maturity date. You’d be paying 600$today for a bond worth 1000 in 10 years.(longer the maturity period lesser would be the issue price vice versa).
  • 14. Apart from the benefits of investment in bonds there are also some risks subjected to bonds such as : • inflation risk, interest rate risk, foreign exchange risk and call back risk etc