eye on the bond purchase, after which Investors should be aware
bonds offer relatively stable returns compared to equities and therefore should be in every depot. However, since the acquisition of a bond lot is important to note, this article will give an overview of the main features of fixed-income securities.
bonds are in most cases a coupon that entitled the Includes interest payments. When do these payments, the investor can see the prospectus. The jacket of the bond, denominated in a nominal amount and represents the right to a refund may be subject during the term price fluctuations. If the price is lower than the nominal amount, it is called in the jargon of "below par" in any other case, the listed price accordingly "above par".
bonds must not always be provided with a coupon. So-called zero coupon bonds pour during the term of no interest, repayment of principal amount takes place at the end.
an investor acquires a loan within the offer period but only in continuous trading, it must, for the period that has elapsed since inception or the last interest payment, accrued interest payable to the seller. This is a compensation for the time the seller owned the bond has to receive non-interest income. For zero coupon bonds, this represents something different. Here, the price goes up, ceteris paribus exactly every day so a lot, would have been incurred as at another bond accrued interest.
Another important feature of bonds is the credit rating. It is performed by so-called rating agencies and provides information on the creditworthiness of the issuer and the risk of default. The principle applies: the higher the Risk, the higher the yield. Therefore, the interest rates are higher with an issuer credit rating lower than that usually government bonds from major industrial nations.
If the investor is about the mode of interest payments as well as the risk of his investments in mind, a successful bond price no longer a problem.
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