IBM Bond Pricing. All bonds have some common characteristics, but they do not al
ID: 2637961 • Letter: I
Question
IBM Bond Pricing.
All bonds have some common characteristics, but they do not always have the same contractual features. Differences in contractual provisions, and in the underlying strength of the companies backing the bonds, lead to major differences in bonds risks, prices, and expected returns. It is important to understand how bond markets actually function and what the appropriate terminology is.
Go to www.nyse.com Click on Products, and then click on Bonds on the right side of the window. Click on Bond Directory by name, and then click on letter I in the line
Explanation / Answer
the bond is a contract that requires the borrower to pay the interest income to the lender. It resembles the promissory not and issued by the government or corporate.
the par value of the bond indicates the face value of the bond, i.e. the value stated on its face. The specific rate of interest is called as coupon rate and it may be paid quarterly, semi annually and annually. at the end of the maturity period, the value is repaid.
bonds are different types in nature, they are Zero coupon bonds, gilt edged bonds, secured bonds, unsecured bonds, perpetual bonds, redeemable bonds, fixed interest rate bonds, floating interest rate bonds, deep discounted bonds and capital indexed bonds.
each bond carries its own characteristics and features.