Bonds

BondsThe Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements. are securities representing a portion of the debt of an issuerThe issuer is the entity that issues financial instruments in order to raise finance. The most common issuers of financial instruments tend to be: Public and private companies, the State or transnational organizations., whether public entity, sovereign state, transnational entity, listed company or other legal entity. Issued for the purpose of raising funds, in the absence of extraordinary events at maturityExpiry or Maturity is the date a financial instrument ceases to exist or matures. they usually provide for the returnThe Return on investment is the change in total percentage of the value of a financial instrument at a given time frame. of the nominal valueIn the case of a share is the percentage of the capital represented by the share, while for Bonds is the amount on which interest is calculated. of the bond. The investor has the possibility, if the bondsThe Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements. are listed, to liquidate their investment on the secondary marketThe secondary market is where financial instruments which are already in circulation on the market are traded. prior to maturityExpiry or Maturity is the date a financial instrument ceases to exist or matures.. Unlike loans, the holder of the bondsThe Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements. receives a regular income in the form of a couponThe right that allows the holder of a certificate representing a title, to collect interest (in the case of bonds) or dividends (in the case of shares), which have matured as well as during the financial year, on shares, administrative and property rights.. Based on the parameters set during placementBusiness done by authorized intermediaries through which newly issued financial instruments or those already in circulation are placed and distributed in the market., the bondsThe Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements. can have coupons with a fixed or variable  interest rateThe interest rate measures the cost of a financing transaction and represents the compensation paid to the bank for the loan of a certain amount of money. It is expressed as a percentage and with reference to the year.. Some types of bondsThe Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements. do not pay intermediate  coupons and the remuneration for the investor is the difference between the purchase price and the amount that is returned at maturityExpiry or Maturity is the date a financial instrument ceases to exist or matures.. The Investor’s returnThe Return on investment is the change in total percentage of the value of a financial instrument at a given time frame. is a function of several variables: on the one hand the amount of the couponThe right that allows the holder of a certificate representing a title, to collect interest (in the case of bonds) or dividends (in the case of shares), which have matured as well as during the financial year, on shares, administrative and property rights. offered, on the other the difference between the purchase and the sale priceThe sale price is the basis for the calculating gains and losses of a derivative contract. of the bond. Another factor which affects bonds’ returnThe Return on investment is the change in total percentage of the value of a financial instrument at a given time frame. is the credit ratingAn opinion awarded by a specialized independent agency, expressed by an alphanumeric code, which indicates the creditworthiness of a debtor or a particular issue of securities. The Rating is emitted as a result of a detailed analysis of the financial situation of the company being assessed and the overall context in which it operates. Ratings are subject to periodic review. of the issuerThe issuer is the entity that issues financial instruments in order to raise finance. The most common issuers of financial instruments tend to be: Public and private companies, the State or transnational organizations., which is the degree of solvency expressed as a ratingAn opinion awarded by a specialized independent agency, expressed by an alphanumeric code, which indicates the creditworthiness of a debtor or a particular issue of securities. The Rating is emitted as a result of a detailed analysis of the financial situation of the company being assessed and the overall context in which it operates. Ratings are subject to periodic review. assigned by specialised agencies. A high level of reliability corresponds to a higher ratingAn opinion awarded by a specialized independent agency, expressed by an alphanumeric code, which indicates the creditworthiness of a debtor or a particular issue of securities. The Rating is emitted as a result of a detailed analysis of the financial situation of the company being assessed and the overall context in which it operates. Ratings are subject to periodic review. and therefore the interest rateThe interest rate measures the cost of a financing transaction and represents the compensation paid to the bank for the loan of a certain amount of money. It is expressed as a percentage and with reference to the year. demanded by the market to finance the issuerThe issuer is the entity that issues financial instruments in order to raise finance. The most common issuers of financial instruments tend to be: Public and private companies, the State or transnational organizations. is lower. The non-repayment of the bondsThe Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements.  results in an issuerThe issuer is the entity that issues financial instruments in order to raise finance. The most common issuers of financial instruments tend to be: Public and private companies, the State or transnational organizations. default and a loss for investor. In the case of currencyThe currency is the money the value of a security is expressed in. The term Currency is used to mean the currency in circulation in a given country and which can be taken as a Reference Currency for securities issued in that country. In the banking terms, currency represents the day interest on a certain sum begins to accrue. bondsThe Bonds are debt instruments representing a portion of debt issued by a company or by a public body to finance part of its financial requirements., which are denominated in a currencyThe currency is the money the value of a security is expressed in. The term Currency is used to mean the currency in circulation in a given country and which can be taken as a Reference Currency for securities issued in that country. In the banking terms, currency represents the day interest on a certain sum begins to accrue. other than that of the domestic currencyThe currency is the money the value of a security is expressed in. The term Currency is used to mean the currency in circulation in a given country and which can be taken as a Reference Currency for securities issued in that country. In the banking terms, currency represents the day interest on a certain sum begins to accrue., the returnThe Return on investment is the change in total percentage of the value of a financial instrument at a given time frame. to the investor is also affected by fluctuations in the exchange rate between its currencyThe currency is the money the value of a security is expressed in. The term Currency is used to mean the currency in circulation in a given country and which can be taken as a Reference Currency for securities issued in that country. In the banking terms, currency represents the day interest on a certain sum begins to accrue. and the currencyThe currency is the money the value of a security is expressed in. The term Currency is used to mean the currency in circulation in a given country and which can be taken as a Reference Currency for securities issued in that country. In the banking terms, currency represents the day interest on a certain sum begins to accrue. of the bond purchased.


imagePlain Vanilla Bonds

Plain Vanilla bonds are very simple bond instruments that give the holder the right to be repaid at maturity with the bond's face value. In addition to that periodic coupons may or may not be paid during the life of the product. The Plain Vanilla bonds, as well as other types of bonds, can be also used by investors for other purposes such as, for example, portfolio diversification.

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    Plain Vanilla Bonds

    They allow to obtain a periodic coupon or an interest at maturity already defined at inception. Nominal value repayment is granted at maturity.

imageStructured bonds

Structured bonds are more complex bonds. They are financial products that provide a variable yield that arises from the combination of a traditional debt instrument, a fixed or variable rate of interest, with one or more derivative contracts. Usually these derivative contracts are linked to the performance of equities, indices, currencies, interest rates or bonds with or without a coupon.

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    Structured bonds

    Yields of this type of bonds is linked to the performance of any underlying as stocks, indices, interest rate or other fixed income securities. Nominal value repayment is granted at maturity.

Text modified: 21.04.2015