One of the basic functions of any security - is to provide profits to its owner, which fully applies to bonds.Depending on the manner in which the owner receives revenue bonds, the bond may be a coupon or discount.Bond appeared in the securities market, such as paper, which carries a coupon, which was the percentage of return and the date of its receipt.Then at a certain day the owner receives money for the bonds and the coupon quenched.
So, discount bond - a security is zero coupon, because it is not installed on the rate of return.The owner of such securities it buys at a discount and receives income from the discount, ie the difference.The Russian stock market is very often uses this type of bond.A typical example of the discount bond is the state short-term zero-coupon bonds, which are sold at auction at a price different from the face value down.
Usually when the issuer of the bond issue sets a certain nominal value of the securities and the rate of return in percentage terms.Coupon bonds usually has a fixed interest rate, which is listed on the very bonds.Throughout the duration of her treatment, she paid for her a regular income.It is worth noting that to install a fixed interest rate can only be a stable economic situation in the country, where rates and prices are almost unchanged.Otherwise, a fixed interest rate implies greater risks for the issuer.If interest rates are lowered, he will have to pay the income at a rate which is fixed at issue.
Naturally, issuers have found a logical way out of this situation.They began to issue bonds with floating interest rates.Widespread received such bonds in America in the 80s, when the tendency of establishing high interest rates and frequent changes.For companies to issue bonds was beneficial to a floating interest rate, which is tied to a specific index, which in turn reflects the situation on the financial market in the real world.Most often, this indicator was the yield on three-month Treasury bills.When you start the bond is set one interest rate, and then after three months, the rate was adjusted according to the yield on the notes.In most cases the interest rate on the bonds is made up of two components: the interest rate on Treasury bills plus a risk premium of 0.5%.
If we consider the situation on the Russian stock market is a typical example of a floating rate bond can be called a federal loan bonds, which have a variable coupon bonds or government savings loan.Yield is directly dependent on the latter yields on T-bills.Payments on coupon bonds are periodic in nature, depending on the conditions established in the issuance of bonds, the yield on it is possible to obtain a quarterly, half-year or year.
Sometimes the bond can be issued with a coupon that is prescribed fixed interest plus a security is sold at a discount.Then the owner receives income from such securities "double": it has a regular coupon payments and at maturity to earn extra income.
Finally, I would like to mention such security as the revenue bond.We will try to define it.A bond of this kind generates income only if the company has a profit.No income, no profit.Bond yields can be as simple or cumulative.For the simple bonds over the years, "downtime" income is not paid, even if in a subsequent period of time the company gets high profits.But the bonds of cumulative income is accumulated and paid to the extent possible.Accumulation term is usually limited to three years.Naturally, with the elimination of cumulative bonds are much higher than ordinary shares and ordinary bonds.
