Features Of A Bond

Improved Essays
a.A bond is a debt instrument which the government or an institution may issue (e.g a bank) to have direct inflow of money. Basically, it’s a security for which the issuer is obliged to pay at the end of the contract, the nominal value. In the case of bonds with a coupon payment, the payments are made at regular predetermined intervals. Therefore, a bond is simply a loan, where the issuer is the debtor and the holder is the lender, while the coupon (if exists) is the interest. The loan is alleging from the issuer of the bond through capital markets, rather than through bank intermediation.

Bond Features:

à Face Value: Is the initial security amount that the issuer promises to repay at maturity of the bond.

à Price: The
…show more content…
à Maturity Date: Is the date that the bond matures.

à Coupon: The rate by which interest is calculated for the bond. The coupon is paid at a certain time period (usually month, quarter, semester, and year) and is expressed as a percentage of 100% percent of the face value of the bond. The coupon, which is specified when the bond is issued, it may be fixed or floating.

à Accrued Interest: Is the interest owed by the issuer but is not yet payable to the bond holder. Accrued interest is the accumulation between the last date of coupon payment and the date of bond purchases by the bondholder.

The purchase or the sale of a bond cannot only be done at the issue date (primary market). The bonds are traded freely on the stock exchanges (secondary market) and their price
…show more content…
They represent a share in the share capital of a company. There are two basic classes of shares: common and preferred shares.

The common share is the simplest form of ownership in a company and gives the holder the right to vote and the right to claim on the residual value of the company on dissolution. Therefore, the claim arising from a common stock following the claims of all other parties entitled to be compensated (tax authorities, employees, bondholders, etc.). The common share also gives the holder the right to dividend, on each dividend distribution declared by the board of the company. Common shares tend to reflect more directly on the value of a company 's activities, compared to bonds and other types of negotiable securities.

The preference share gives the holder the right to dividend payment with priority over an equivalent common share. Furthermore, the claims of the preferred shares on the company 's residual value upon liquidation have priority over common stock. The trading of listed shares is available on stock exchanges worldwide.

Stock

Related Documents

  • Improved Essays

    Marshall is the purchasing agent for the DigitoolArt Corporation. His duties require him to negotiate and execute contracts to purchase office supplies and equipment for the corporation. Assume that Bronson, a computer salesperson, pays Marshall a $20,000 kickback to purchase from him computers needed by the DigitoolArt Corporation. What breach of the duty of loyalty has Marshall committed here? A) competing with the corporation B) making a secret profit C) self-dealing D) usurping a corporate opportunity 4.…

    • 992 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Acc 561 Week 9 Final Paper

    • 1345 Words
    • 6 Pages

    1-Non-profit organization: “A business entity that is granted tax-exempt status by the Internal Revenue Service. Donations to a nonprofit organization are often tax deductible to the individuals and businesses making the contributions”. 2- Share: “one of the equal parts into which a company's capital is divided, entitling the holder to a proportion of the profits”.…

    • 1345 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    Costco Wholesale Corporation, better known simply as “Costco,” began with a single membership warehouse in Seattle, WA in September of 1983. The company was formed by James Sinegal and Jeffrey Brotman. The business concept was to create a warehouse club where consumers and businesses can subscribe to Costco’s Membership Plan. Members of their Warehouse Club can purchase goods in bulk. With the growth of the company, Costco also added services that could be purchased at a reduced rate.…

    • 471 Words
    • 2 Pages
    Improved Essays
  • Improved Essays

    Stock Market Causes

    • 1142 Words
    • 5 Pages

    A stock is a type of ownership in a company where a person is a part of the company’s assets and earnings. Common and preferred are the two types of stock. Common stock is where the owner is entitled to vote at meetings and obtain dividends, while preferred stock does not have the right to vote, but has a higher claim on earnings than common stock. Meanwhile, a stock market is a market where shares of corporations are issued and traded through exchanges. Some examples of stock markets in the United States and around the world are the AMEX, or American Stock Exchange, the NYSE, or New York Stock Exchange, Tokyo Stock Exchange, and London Stock Exchange.…

    • 1142 Words
    • 5 Pages
    Improved Essays
  • Decent Essays

    Incredible Debt

    • 237 Words
    • 1 Pages

    What is a convertible debt? A short term debt that is owned by the company, which can be converted into share values at any desired time. The debt includes the loans and funding it had received from its investors. The company does not have to pay any premiums for these debts.…

    • 237 Words
    • 1 Pages
    Decent Essays
  • Decent Essays

    1) Collect all Crosby cases in which a plaintiff alleges malpractice against a lawyer for failure to draft a shareholder or CCA that protects minority shareholders. As a threshold matter, the statute of limitations for legal malpractice actions is one year. Ohio Rev. Code Ann. § 2305.11(A). Generally, an individual shareholder may not bring a legal malpractice action against an attorney that is employed by the corporation itself.…

    • 1912 Words
    • 8 Pages
    Decent Essays
  • Great Essays

    Long-Term Planning Long-term planning is essential for a business is to thrive and plan. Some organizations develop plans that are designed for a year, and some are meant for three to five years. When an organization creates plans, they typically streamline into strategic or operational plans. A strategic plan is normally intended for long term objectives. As Siciliano observes, “the plan is typically intended to drive the company’s strategy for several years, and serves as the basis for the company’s operating plan” (Siciliano, 2015).…

    • 1295 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    Background Home Depot (NASDAQ: HD), is one of the largest principal home improvement retailers, with an estimated 371,000 employees and annual sales of $88 billion. It was founded in 1978 and headquartered in Atlanta, GA. Their products and services target both the do-it-yourself homeowners and professional contractor markets. They have a network of roughly 2,260 big-box stores in three countries that sell a wide assortment of building materials, home improvement products, and lawn and garden products. Also, they provide numerous external services to do-it-for-me customers, installation projects from carpeting, flooring, and cabinets to roofing, windows, and central air systems.…

    • 1073 Words
    • 4 Pages
    Improved Essays
  • Decent Essays

    A corporation is directed by a Board of Directors. There are stocks, which are remaining assets of the corporation that would be due to stockholders, which fluctuate in value according to the profits or losses of the corporation. Corporations pay a different tax rate then companies and individuals. A limited liability company (LLC) does not have stockholders, it is comprised of members that have an interest in the company but do not have any personal liability if the company were to be sued.…

    • 294 Words
    • 2 Pages
    Decent Essays
  • Decent Essays

    Installment Loans

    • 400 Words
    • 2 Pages

    Installment loans are designed to be paid back over the course of several months instead of immediately. Many people decide to get an installment loan if they know they need to borrow a lot of money and need more time paying it back. If you are thinking about getting an installment loan, then there are several things that you will need to know. What You Need To Know About Installment Loans There Are A Few Requirements That Must Be Met You must be at least 18-years-old to apply for an installment loan.…

    • 400 Words
    • 2 Pages
    Decent Essays
  • Decent Essays

    Municipal Bonds

    • 357 Words
    • 2 Pages

    1. What are municipal bonds? Describe two different types of municipal bonds. Municipal bonds are of or related to a town or city or its local government. 2.…

    • 357 Words
    • 2 Pages
    Decent Essays
  • Improved Essays

    However, the stockholder does not own the company or the assets but the shares sold. In this case, the shareholder benefits from a company’s financial performance and management. For these reasons, investors consider some critical information before…

    • 477 Words
    • 2 Pages
    Improved Essays
  • Improved Essays

    James Franey was a businessman with experience as a fixed income trade, who ran his own hedge fund Kenish Town Capital. In November 2008, Franey was considering a unique arbitrage opportunity. The arbitrage consisted of two U.S. Treasury bonds with identical maturities. Each of the bonds paid a semi-annual coupon. The two bonds differed in their coupon rate: one bond had a 4.25% annual coupon rate while the other had an annual coupon rate of 10.625%.…

    • 561 Words
    • 3 Pages
    Improved Essays
  • Decent Essays

    Individuals are reducing their overall risk, because only part of the money is being put in each investment. For example, if someone has invested in several different types of investments and their stock investment drops, they still have other investments 3. What are common stocks? What are the advantages…

    • 629 Words
    • 3 Pages
    Decent Essays
  • Improved Essays

    Pink Sheet Stocks

    • 634 Words
    • 3 Pages

    The past and the present of the Pink Sheet Stocks History The Pink Sheet Stocks were originally named for the shade of paper the quotes were generally imprinted on preceding the electronic framework. They are optional business sector offers of stocks that are accessible on the U. S. Over the Counter (OTC) market. "Market Makers” are the dealers who focus on purchasing and offering the securities of OTC sponsors and use the Pink Sheets to distribute offer and ask costs.…

    • 634 Words
    • 3 Pages
    Improved Essays

Related Topics