So, what is a bond?The business environment is covered by this term emission debt securities, the main feature of which is considered to be an obligation person who issued it, at some point to pay the holder an amount specified on it, and the interest (coupon instruments).Unlike stocks gain on him fixed.One who issue bonds, called by the issuer.It can act as an organization, the administration of the executive authorities of different levels, foreign companies and entire countries.
bond issue can be for various periods - from one year to several decades.He who possesses it is called the holder of this document.Unlike conventional loan transfer of rights claims such debt does not require a large clearance procedures.Buying and selling of bonds to maturity can be done repeatedly.When compared to other equity securities - stocks, we can distinguish the basic difference.What is the bond - a property right of a creditor to demand return of the sum paid for it, plus interest.It does not allow the holder to become the owner of the share of the company that issued it, and take part in the activities of the company-issuer.
Moreover, bondholders have a preferential right to the return of loan funds with respect to holders of shares entitled to dividends.This principle is maintained in the event of bankruptcy of the issuer.Analyzing from this point of view, that such a bond, it can be concluded that it is more robust security than share.Especially if it has issued some steadily developing country, has a good asset.In some situations, it may be carried out conversion of shares and bonds.
Like any securities, they come in various types, depending on certain characteristics.What is a bond, when viewed on these grounds?It can be different according to the type of issuer and the term of the loan, as described above.Wherein the second characteristic may be varied not only by the length of time, but also the possibility of changing it.In particular, the paper can be fixed maturities and perpetual.Depending on the degree of ownership of bonds they can be bearer and registered shares (when the holder is indicated on the document in the record books).
issuing debt securities data may be divided on the target (for the financing of specific projects) and conventional.Type of bond placement can be free and compulsory.There is also a classification in the form of repayment of borrowed funds (in the form of physical and monetary).Extinguished the debt obligation may lump sum or in installments.
In addition, bonds are classified according to the method of payments: interest only, only the face value, the sum of the previous two at maturity, reorganization, periodic fixed income plus the principal amount at maturity of the loan.The coupon rate may be different (floating evenly increasing the minimum mixed, unchanged).Shares may be convertible and vice versa, as they have a classification depending on the availability of collateral.
