Basics of bonds investment

There are characteristics that become attributes commonly attached to bonds. It is necessary to know in advance that you who intend to invest are not confused with the terms that become a mention of the characteristics of bonds. Here are some characteristics of bond characteristics that you need to know and understand. Aside from that, hiring the professional Fort Lauderdale bail bonds can also help you to make the right decisions.

1. Nominal Value or Par Value

Inte$reted as the principal value obtained by the bondholder when the maturity date arrives. As an illustration, PT X issues bonds in the primary market (first-time sales) with a nominal value of $100 billion with a minimum purchase of $ 1 billion. The initial sale price of the bonds is converted in percentage to 100% which is referred to as the par value or stingray price.

Bonds that have become the property of investors are then recorded and traded in the secondary market at a price that is certainly not the same (fluctuate). The price that was originally 100% could be 110%, 115%, or 118%. That is if the bonds are worth $1 billion (100%) and in the secondary market to 110%, the interested enthusiasts of the bond must spend $1.1 billion.

2. Interest Rate / Coupon Bond (Interest Rate / Coupon Bond)

Is the interest included in the nominal value/value of bonds pair that obliged to be paid to bondholders. Coupon payments are made at a certain period of time. Usually every 3 months or 6 months. The bond coupon consists of several types, including fixed coupon (coupon) and floating / variable coupon (floating / variable coupon).

The difference, fixed coupon (fixed coupon) has the same amount starting from the beginning set to maturity. While floating / variable coupon (floating / variable coupon) has a quantity that refers to the reference rate. For example, bonds held with a nominal value of $ 1 billion are subject to 7% fixed coupon and are paid per 6 (six) months then the value of the coupon received is 7% x $1 billion = $70,000,000.

3. Maturity Date

It is time for bondholders to receive back the face value (debt) of the bond issuer. Different maturity assignments for each publisher, both State and private. There is 1 year, some are 5 years old. The difference is, the shorter the time, the more likely to be predictable, the risk is small, but the total profit earned from the coupon payment is not great. Conversely, the longer the time, tend to be more difficult to predict (the impact of inflation and interest rates that are not always stable), the risk is greater, but the total profit gained from the coupon payment is greater.