all about bonds
In this article, we'll examine the material is all about bonds, their types and features of the notes. After this article you will certainly know all about bonds is much more than now, get into professional vocabulary. Consider the material will be on the example of the company's bonds of «IMTrast».
In the beginning of debts and debtors
Strangely enough, but by far the biggest economy in the world - the us economy has a negative balance, and is the largest debtor in the world.
How can this be? The richest country, the world leader in almost all spheres is the largest debtor. Look for the answer in a well-known author of many popular books on economic topics P. Kiyosaki, thinking about the answers over him a few simple questions:
How much time do you want to save $ 1 million, and how much time should you, to 1 million dollars take?
Who will be the richer - the man who all his life working, trying to save one million dollars or one million dollars can take under 10% APR and get 25% of the annual income from the investment of the loan amount?
Whom does the Bank rather give a loan to someone who works hard for the money, or those who can borrow money and knows how to force themselves to work?
The debtor, may be not everyone, but only the one, who is able to meet its debt obligations.
All financial managers and heads of corporations, States, and actively make use of the loans, as the strategy of augmentation of the financial well-being of States, cities, and private corporations. And the most popular tool used for such purposes, are bonds.
all about bonds: what is The essence of bonds?
Note - this document (the security), which confirms the ability of the Issuer (the one who bond issued) of the debt to the investor. That is, the private investor, in fact, gave the Issuer of the money in debt. This document freely traded on the market (sale and purchase).
Give a definition to this document. Bond is a debt equity security, the loan relationships between the Issuer and (creditors).
The Issuer, in turn, pays the interest income of the investor, as well as in the term returns borrowed funds. Thus, a bond is a financial instrument clearance of the debt.
all about bonds: the Specifics of the bonds
Parameters of the issue. Main parameters of the issue are presented below:
The nominal value of
Issue volume of the bonded loan
The amount of income paid on the bonds
Maturity of the bonds
All bonds are issued with a term of maturity. Distinguish:
Short-term bonds circulation term of up to year or from 1 to 5 years
Medium-term bonds circulation term of 5-10 years
Long-term bonds with a maturity of more than 10 years
Properties bonds
As with all securities, bonds have a number of properties:
Specific duration of the
All bond holders have the priority in the receipt of income, bonds have the frequency and amount of payments
Bond holders have the priority right on liquidation of the enterprise to meet the financial requirements.
Bonds are acquired, as a rule, investors with conservative investment strategy. These investors do not aim to get a high income, their main task - reliable preservation of capital. The investor expects to receive a stable and regular income in the form of interest payments, and after the expiry of the bonds - get your own capital.
And what each of you can say about his investment strategy that you prefer the reliability or performance?
Each of the Issuer under the bonds issue relies on the possibility of their sale. This can be accomplished either through the stock exchange through the listing procedure, that is, the opportunity to introduce its bonds to the list of traded instruments on the stock exchange or sell them on the OTC market. The amount of income on the bonds, as a rule, less than rates on credits and more interest rates on Bank deposits.
all about bonds: Types of bonds
There are several types of bonds: state, municipal, and corporate.
Corporate bonds are bonds, âûïóøåííûå private corporations of various spheres of business activity.
Government bonds are issued by States which may be located both inside the country and abroad.
Municipal bonds are issued by municipalities, regions, cities. To the most reliable, but with a minimal income, are government bonds, and to the most profitable - corporate.
The main distinctive feature of the bonds of other types of securities is their high reliability. This is especially important in periods of financial crises and recessions of the economy.
