You have been asked to write a training document about the US Bond Market for use in the new employee-training program. In your document, you must make sure to address each of the following: 1a: The key players in the market; and the types of investments available to both individual investors and institutional investors, Bond Characteristics A bond is a "security" which gives the holder a financial claim on the issuer. This claim protects the holder in circumstances in which the issuer is unable to pay the amount due. It is made formal by the "trust indenture", a legal document, which specifies all of the bond's features and the legal rights and obligations of all the parties to the agreement (http://www.finpipe.com/bndchar.htm). The bond market and bonds investments offer investor's (both individual and corporate) dependable income, relative safety and portfolio diversification. Because bonds typically have a predictable stream of payments and repayment of principal, many people invest in them to preserve and grow capital or to receive consistent interest income (http://www.globaldirectsvcs.com/Bond_Trading.html). Key Players Specifically, a bond (a fixed interest financial asset) is issued by governments, companies, banks, public utilities and other large entities and traded/bought by investors (individuals and/or corporations) http://economics.about.com/cs/economicsglossary/g/bond.htm. Thus, these are the key players, both the issuers and the buyers alike. Types of Bonds and how they are transacted: Bonds have many characteristics such as the way they pay their interest, the market they are issued in, the currency they are payable in, protective features and their legal status. Bond issuers may be governments... ... middle of paper ... ...hange," however, is ONLY one type of trading in the stock market. See definitions below for the main differences between the bond markets and the stock markets (also other stock market links to consider). Thing for investors to consider when investing in stock market and mutual funds (in part, due the risk factor associated with the stock market): Look at More Than a Fund's Past Performance. Know how the fund impacts your tax bill. Scrutinize the fund's fees and expenses. Consider the age and size of the fund. Think about the volatility of the fund. Factor in the risks the fund takes to achieve its returns. Ask about recent changes in the fund's operations. Check the types of services offered and fees charged by the fund. Assess how the fund will impact the diversification of your portfolio. artrepreneur.thepauper.com/content.asp
The purpose of this paper is to provide a summary of the article called “Can We Keep Our Promises?” by Robert D. Arnott, and to help better understand the three key risks facing each investor.
The high yield bond is a bond that features higher returns but with a lower credit rating than typical investment-grade bonds. These bonds can also be referred to as ‘junk bonds’ that are rated as below investment grade by organizations such as Moody’s and Standard and Poor’s. [Appendix #1] Generally, companies that issue high yield bonds may receive their rating due to a few characteristics, such as being less established than typical household brands, showing weak financial performance or they may have suffered a financial setback at some point in their corporate history. Although, high yield bonds may seem to have a relatively negative reputation among investors they possess many attractive advantages which include: diversifying portfolios, greater yields, lower volatility thus makings for a good long-term investment and the fact that bondholders have priority of recovering their money over equity security holders in the case of bankruptcy. These bonds are accessible to investors either as individual issues or through the means of high-yield mutual fund investments. On the other hand, there are certainly risks involved when investing in high yield bonds, such as credit risk where there is the possibility that the issuer defaults on the principal or interest payments over the course of the term and investment in these bonds ultimately depends on how informed the investor is and the amount of risk the investor is willing to tolerate. Similar to other types of securities there is always the threat of economic downturn and risks occurring when investing in international markets, such as political and exchange rate risks. In contrast, high yield bonds are able to mitigate interest rate risks better, and are less vulnerable to drast...
"Who Should Invest With Us - Edward Jones: Making Sense of Investing." Edward Jones. Web.
The national debt of the United States is calculated using the worth of the Treasury securities that have been distributed by the Treasury and other bureaus of the federal government. Debt held by the public consists of debt held by persons, businesses, the Federal Reserve System, and foreign, state, and local governments. Debt that is held by the government consists of trading securities that are held in accounts managed by the federal government. Examples of debt held by the government are funds owed to program beneficiaries, such as the Social Security Trust Fund.
A bail bond is essentially a small loan in exchange for paying a premium on the bail amount you need. Most states have their own limits to how much a bail bond premium can be, but Texas does things a bit differently. Each county is responsible for regulating the maximum premium for a bail bond. Let a bondsman know how much money you need for
A bail bond is typically used when an incarcerated individual has been ordered by the judge to give bail prior to being released before the trial begins. Once a bonds is posted for this individual, this accused person is removed from the custody of the police until the final outcome determined during the trial. If the person does not come back to court
What is a bond? Bonds are often considered by investors to be “financial IOU's.” Frequently, bonds are issued from banks designed for quick, upfront cash used in lending purposes, such as loans. When purchasing a bond, the buyer pays an upfront sum of money to the seller. By the terms and conditions...
One of the most important of these is the convertible bond, which can be exchanged for common shares at specified prices that may gradually rise over time. Such a bond may be used as a financing device to obtain funds at a low interest rate during the initial stages of a project, when income is likely to be low, and encourage conversion of the debt to stock as earnings rise. A convertible bond may also prove appealing during periods of market uncertainty, when investors obtain the price protection afforded by the bond segment without materially sacrificing possible gains provided by the stock feature; if the price of such a bond momentarily falls below its common-stock equivalent, persons who seek to profit by differentials in equivalent securities will buy the undervalued bond and sell the overvalued stock, effecting delivery on the stock by borrowing the required number of shares (selling short) and eventually converting the bonds in order to obtain the shares to return to the lender.
Bonds and Equities Defining Bonds and Equities Bonds are certificates of obligation or indebtedness, issued by governments and companies to raise funds repayable at interest over relatively long periods. Equities are investments exercised by purchasing a share in the ownership of a corporation; and are more commonly called stocks or shares (as in the stock market or share market). Bonds have a very favorable relationship with equities. Historically, when equity markets fell, bonds had gone up in value, partially offsetting the fall. When equity markets rise, interestingly, high quality bonds also tend to rise, although to a lesser extent. Therefore for an investor with equity portfolio wanting to reduce portfolio volatility or make the portfolio less susceptible to a fall in equity markets bonds are the most appropriate. Bonds generally pay a much higher income than high quality government and corporate bonds to compensate for higher risk. Similar to equities, bonds tend to perform best when economic growth is strong with low stable interest rates. In such an environment the ability of these companies to pay interest and repay their bonds on the maturity date is greatly enhanced. [Z. Bodie, 2000] Investment in bonds and equities, usually via stock-markets and other exchanges for financial instruments. So-called "portfolio investment" is usually relatively easy to re-sell; hence this type of investment can flow relatively easily into and out of a country's stock-markets. This can lead to volatility in share-prices and levels of capital availability. What’s the difference? Equities are shares listed on the stock exchange. Their prices are influenced by the underlying performance of the companies, the sectors in which they operate ...
If you or a loved one has been arrested—and you want to get out of jail—you may need a bail bond. A bail bond is essentially a loan, which covers the amount of the bond (the amount of money needed to be released from jail,) so that the person in jail is released.
William Sharpe, Gordon J. Alexander, Jeffrey W Bailey. Investments. Prentice Hall; 6 edition, October 20, 1998
According to Central Bank of Kenya (CBK) (2009), the recognition that local Infrastructure bond market regulation remains underdeveloped has more recently led to several efforts to promote their development, including the Infrastructure bond instrument with a Diaspora component. The bonds market in Kenya trades in both the treasury and corporate bonds. While treasury bonds were introduced as early as mid-1980s, corporate bonds came to the market in 1996 during the reform period. Despite the early initiation of treasury bonds in the market, the market remained almost stagnant, with the government using treasury bills to finance domestic debt. It was not until 2001 when the government took a deliberate effort to develop the market that activities of the treasury bonds market increased (Mbewa, Ngugi & Kithinji, 2007).
Companies usually have the option to decide whether to choose a long-term loan or a bond when they are considering expanding their business. Long-term loans and bonds are somewhat similar because they both carry interest rates. Loans are borrowed from a bank with a set interest rate, while bonds are issued from the public with the company issuing semiannual payments which are done at the end of the term.
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
Exchange traded: These are standardized instruments and are backed by clearing house. So there is no default risk. E.g. Futures.