What Are The Different Types Of Bond Definition?

What Are The Different Types Of Bond Definition?

What Are The Different Types Of Bond Definition?

Free Online Articles Directory

Why Submit Articles?
Top Authors
Top Articles
FAQ
AB Answers

Publish Article

0 && $.browser.msie ) {
var ie_version = parseInt($.browser.version);
if(ie_version Hello Guest
Login

Email

Password

Remember me?
Lost Password?

Home Page > Finance > What Are The Different Types Of Bond Definition?

What Are The Different Types Of Bond Definition?

Edit Article |

Posted: Dec 31, 2006 |Comments: 0
| Views: 3,517 |

]]>

A bond is a debt security that is run by a government or agency. It usually lasts for long periods of time, or durations, which will take longer to mature. There are many important bond definitions that you should know.

The first bond definition you need to know is that of a bond fund. This is a type of mutual fund where you invest in bonds. You can invest in bonds of different values, including a baby bond that has a face value of less than a thousand USD. Also, your bond will feature a Committee on Uniform Security Identification Procedure number for identification.

Some of the most important bond definitions to consider involve what types of bonds are out there. For example, bonds can have different periods of time for maturity, which is the date in which you will have to pay back the principal on the bond. For instance, a treasury bond is a standard type that features a maturity level between ten and thirty years.

A treasury bill, however, is a bond that has a maturity level of less than a year. It is usually given out in an auction, where you will receive the bill at an interval stated by the Federal Reserve Bank of the United States. You will also need to consider the bid, which is the top price offered for a bill, when looking for one. The lowest price is the asked price.

There are other bonds with different maturity levels to consider too. A treasury note will have a maturity level between one and ten years. Also, an intermediate-term bond will mature in five to ten years. If you need to redeem your bond before maturity, however, you can take out a callable bond.

Also, a tax exempt bond will not have any federal assets tax involved. A zero coupon, meanwhile, will have no interest and is sold at face value, which is the par value, or original price, of the bond. However, there can be a discount, which is where the market price is less than par. The owner of this type of bond will receive a profit at bond maturity. Plus, a derivative zero bond is one that does not have coupon or principal payments, as the coupon will be sold separately. The coupon will be discussed later in this article.

A convertible bond is another bond definition to look at. This is a bond that allows you to convert your investment into stock. The price of this when divided by the conversion price is the conversion ratio.

In some cases a bond involving a different type of currency than what you are used to can be involved. This is where a Eurobond is taken out. A Eurobond is a bond that usually has no tax and is issued in a currency other than what you use.

Several bond definitions you will need to consider involves how much you will pay. The ask and bid have already been discussed, but there are other bond definitions to watch for. For instance, there is the coupon, which is the annual interest percentage on your bond that you will have to pay.

Also, there is the yield, which is the rate of return on your bond. This can be read through a yield curve, which is the pattern of yields on bonds that you may have. The modified duration can be considered, as it shows how sensitive a bond is to changes in its yield. This also relates to the volatility of the bond, which is the measure of the bond’s price movement over time. The convexity of the bond is also important to consider. This is the measure of the curve of the price of the bond and its yield in regards to a fixed assets.

A current yield is one that is the coupon payment divided by the price of the bond on the market. However, the basis point is another type of bond definition that relates to this. It is one hundredth of a percentage point of a yield.

Debentures are essential bond definitions to know. A debenture is a debt secured by the lender and its assets. A subordinated debenture is one where a claim for interest and principal are made later on.

In the case that you are considered about your bonds, you should know about another bond definition, the hedge. The hedge is where you reduce your risk in a bond or security by taking in an offsetting position with another security.

Retrieved from “http://www.articlesbase.com/finance-articles/what-are-the-different-types-of-bond-definition-87333.html”

(ArticlesBase SC #87333)

Liked this article? Click here to publish it on your website or blog, it’s free and easy!

Geoff Spencer -
About the Author:

Geoff Spencer is a staff writer at Investor’s Journal and is an occasional contributor to several other websites, including Online Business Gazette.

]]>

Questions and Answers

Ask our experts your Finance related questions here…200 Characters left

What are different types of birth control pills ?
How many different types of weed is there ?
How many different types of clouds are there ?

Rate this Article

1
2
3
4
5

vote(s)
0 vote(s)

Feedback
RSS
Print
Email
Re-Publish

Source: http://www.articlesbase.com/finance-articles/what-are-the-different-types-of-bond-definition-87333.html

Article Tags:
investments, bond, bond definitions

Comments

yabcoder says:

January 15, 2011 at 6:37 am

awesome, very true statements, wish i had money to invest under your ideas
Boris82much says:

January 15, 2011 at 6:49 am

Fidel Castro announced a few days ago that marxism has FAILED his country and its people. He said since his socialistic take-over of Cuba marxism has done nothing…nothing for his country. He has become more of a capitalist than most democrats in America.
FREE MARKET=FREE PEOPLE. I LOVE THE U.S.A.!!!
SmithS93987 says:

January 15, 2011 at 7:12 am

Hey, if you want more views and subscribers go to viewsandsubs (dot) com

holy craaap this is made? of epic win!
judychild582 says:

January 15, 2011 at 7:43 am

Hey, if you want more views and subscribers go to viewsandsubs (dot) com

okay? thats just scary! :Lbr/made me lol though (:
lucasindustriesinc says:

January 15, 2011 at 8:32 am

FHA? Breaking News! Barney Franks Lover, his boyfriend that is, is one of the Heads of Fannie/Freddie.

If that had been a heterosexual relationship, the MEDIA would have been all over it. imo
Jfkennedy62 says:

January 15, 2011 at 8:57 am

What is an American? What do Americans stand for? What are Americans laws and rules? Are Americans actually free? Free from what and who? Someone help me please because I was borne American.

~ Author unknown
liberty013 says:

January 15, 2011 at 9:15 am

..and we will because too few of us have the backbone to stand up to it.
americafirst101 says:

January 15, 2011 at 9:27 am

Peter, We Love Ya …But did you say Asia or Asi-er ? LOL
tubezillauk says:

January 15, 2011 at 10:08 am

GOOD TIME TO BUY JUNK BONDS
wolfgangfaust says:

January 15, 2011 at 10:28 am

giving money to the junkie (government) for anything is not the answer. the junkie uses it for it’s fix-bigger government. they have drained social security,American Indian trust funds and everything else to fund wars and expand it’s own powers. the only thing “growing” is the junkie. the executive branch has increased it’s budget and employment by 15%. why are all of the cabinet and many in congress tax cheats? because they know it is illegal. they expect “us chumps” to pay for it all.
wolfgangfaust says:

January 15, 2011 at 10:47 am

the federal government is insolvent. the chinese have told us to “not dishonor” their money by continued huge deficit spending. and the fed prints more. the prostiticians only answer is to tax the people. our “government” is a junkie.

north korea is dependent on china for everything. i think that n koreas’ recent provocative militaristic actions is chinas’ response to the U.S. continuing to not”respect their money”
chick5581 says:

January 15, 2011 at 10:58 am

CRAZY man … that was too funny you guys are gonna keep me luaghing all day …. haha very creative [=
DillonX says:

January 15, 2011 at 11:30 am

the chinese people dont like to be ripped off — once gold went over $1000, gold jewelry sales went down & the people started bringing in their jewelry for cash
loren1283 says:

January 15, 2011 at 11:58 am

If you know any chinese people, they save thier entire lives, and they cant stand getting ripped off for anything.
Mrtraveler01 says:

January 15, 2011 at 12:33 pm

Well if gas prices go up like they did before I definately can see GM’s consumer base trading their SUV’s for smart cars. Why do you think Hyundai and Toyota is excelling in sales? It’s not for their trucks and SUV’s. More and more consumers are trading their SUV’s and trucks for more fuel efficient cars. I agree there will be a portion of people who would not give up their SUV regardless of the circumstances but I think that will be a small part as time goes on.

My two cents.
dellamalo says:

January 15, 2011 at 12:48 pm

Yes, note the word “pseudo”. CNBC just had a profile on the new models GM is planning to build. Personally I would never purchase one, I own and have owned a Chevy SUV for many years. I cannot see GM’s consumer base trading in their SUV’s for smart cars.

Safety of these little tin cans is another issue…
foolcow1976 says:

January 15, 2011 at 12:55 pm

So would I be right in assuming that you are shorting everything he recommends buying? You’re sure to make a huge gain.
shahen13 says:

January 15, 2011 at 1:04 pm

The only thing worthless is any analysis by Peter Schiff. Listen to him and you are sure to lose 70% of your investments. He does that well.
malibuhur12 says:

January 15, 2011 at 1:20 pm

Inflation . us is a scam
950horsepower says:

January 15, 2011 at 2:11 pm

Not only that, but internationally, in most countries the public is starved for US products of all kinds. That’s because to even do business, you have to factor in the tariffs and other fees those countries charge to bring product in. So, US product has been scarce and expensive. Like imports of all kinds used to be here, 50 years ago. That market is just sitting there, and it’s bigger even than the US market.

We should all grab a chunk, just so we can say we did. It’s a good living.
sexdrugsRnR says:

January 15, 2011 at 2:14 pm

you can’t have ‘capitalism’ when there is a monopoly on the monetary system. the free market means that people are free to issue their own $.
motgr says:

January 15, 2011 at 3:03 pm

Makes sense to me. Plus, with a dropping dollar, your goods will be cheaper for the importing countries.
950horsepower says:

January 15, 2011 at 3:50 pm

All that consolidation is working against us right now. Pumping money into the very mechanisms that got us in trouble in the first place, will only support further monopolization, and that’s the opposite of what we need, if we are going to build a new manufacturing base in the USA.

Maybe we won’t be able to do that, but I’m giving it a try anyway. Call me crazy, I’m from Berkeley.
950horsepower says:

January 15, 2011 at 4:15 pm

Nothing wrong with them intrinsically. Contradictory to common sense as investments for the time being. At least, if you depend on the US or live and believe in the USA. Right now, we need to invest in all the things we have been avoiding for the last 80 years, and it sure isn’t infrastructure.

My strategy is simple, and it seems right to me. Manufacture physical product here, take delivery, pay the tax and export.

It works.
jzmdi493 says:

January 15, 2011 at 4:49 pm

If you don’t prepare now for hyperinflation you will go broke. Signup for the free National Inflation Association newsletter at: Inflation . us

What Are The Different Types Of Bond Definition?

Comments

Speak Your Mind Cancel reply

Who's Online

Pages

Recent Posts

Categories

Recent Comments

Meta