bond - is an emissive security, which, along with the promissory note is a debt instrument.The holder of the bond at cashing it expects to receive the nominal value of the security and interest are paid in certain periods of time.It is this feature of the bonds: prolixity of payments over time, and somewhat difficult to assess the value of the bond.
Typically, bond issuers produce this type of securities for working capital at the expense of loan capital.When such an operation bond buyer and the lender is the same as the buyer takes over the financial risks that are also taken into account when assessing.The popularity of this type of loan is simple: investing in bonds associated with a lower risk than venture capital investments (investing in stocks), so investors could calculate their future incomes and to calculate the interest on the security.The risk of non-payment, though minimal, is always there, and the accuracy of the analysis of reliability of the issuer is also taken into account when evaluating bonds.Methods for evaluating bonds are the same as for other securities, such as notes or certificates of deposit (methods of income and comparative approaches).
First, discount the cash flows taking into account the non-simultaneity of coupon payments and the amounts received are added together overall coupon yield, cast to a specific point in time.This figure is added to the value of the bond, discounted at the time, iecast to the current moment.
Increase issuers and buyers of the bonds has a beneficial effect on the financial market as a whole, because it creates additional sources of loan funds, in addition to loans.But at the same time, growth in the number of issuers and the operations of the bank loans secured by marketable securities may result in the loss of financial capital.
If disclose the subject concept and types of bonds, it also requires a detailed examination of the proposed options in the financial market bonds.Because there are a lot of different bonds, they are classified on several grounds.
depending on who issues these securities, the following types of bonds: government, municipal, corporate, foreign.The timing of release allocate these types of bonds, as bonds with specified maturity date and no fixed term.The first, in turn, can be short-, medium- and long-term.The second group is more diverse: perpetual, callable bond (which can be withdrawn before the end of the term), bonds, puttable, extended and delayed.The difference between the extended and delayed is that the first can extend the deadline for receipt of the face value and at the same time continue to receive interest on delayed a possible move or delay the date of payment.
Types of bonds in the order of ownership: registered and bearer.According to the objectives of the bond issue they are divided into those that are used to refinance debt issuer, and those, which are used to finance certain investment projects.By type of accommodation: free and forced placed.By the method of repayment of the nominal value: one-off payment, the distribution of the time of repayment, consistent repayment.
Types of bonds by the nature of treatment: non-convertible and convertible.By providing: secured and unsecured income.To pay coupon yield bonds can be fixed-rate, floating-rate coupon, with uniformly increasing the coupon rate, with minimal / zero coupon, pay-choice and finally, bonds mixed type.
