Documente Academic
Documente Profesional
Documente Cultură
Submitted to:
Mr. Salman Ahmed Shaikh
Submitted by:
Khalid Irfan (BM-15047)
Definition of a Bond
Bonds are long terms debt instrument that issued
by government or corporations.
A bond is a security that obligates the issuer to
make specified interest and principal payments to
the holder on specified dates.
Coupon rate
Face value (or par)
Maturity (or term)
Bonds are sometimes called fixed income
securities.
Types of Bonds
Pure Discount or Zero-Coupon Bonds
Pay no coupons prior to maturity.
Pay the bond’s face value at maturity.
Coupon Bonds
Pay a stated coupon at periodic intervals prior to
maturity.
Pay the bond’s face value at maturity.
Perpetual Bonds (Consols)
No maturity date.
Pay a stated coupon at periodic intervals.
Bond Issuers
Government
Financial Institutions
Corporations
Government Bonds
Treasury Bills (Gilts)
No coupons (zero coupon security)
Face value paid at maturity
Maturities up to one year
Treasury Notes
Coupons paid semiannually
Face value paid at maturity
Maturities from 2-10 years
Government Bonds
Treasury Bonds
Coupons paid semiannually
Face value paid at maturity
Maturities over 10 years
The 30-year bond is called the long bond.
Government Bonds
No default risk. Considered to be riskfree.
Exempt from state and local taxes.
Sold regularly through a network of primary dealers
Corporate Bonds
Secured Bonds (Asset-Backed)
Secured by real property
Ownership of the property reverts to the
bondholders upon default.
Bond Ratings
Moody’s S&P Quality of Issue
Aaa AAA Highest quality. Very small risk of default.
D - In default.