Capital Market Course 7. VII. Bonds Bonds: part of a loan Characteristics: - Medium and long term investment - The holder claim for the issuer - Debtor.

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Presentation transcript:

Capital Market Course 7

VII. Bonds Bonds: part of a loan Characteristics: - Medium and long term investment - The holder claim for the issuer - Debtor payment commitment - More creditors - Tradable - Bond Owners Register

VII. Bonds SharesBonds Part of own capitalPart of a loan Co - ownerCreditor Voting rightNoNo DividendsCoupon (Interest) Unlimited life timeLimited life time Higher riskLower risk

VII. Bonds Bond’s loan element’s: - Par value - Subscription value - Coupon (Interest) - Coupon rate - Net coupon rate - Accrued interest - Maturity - Repayment method - Advance repayment - Repayment cost - Loan cost - Market price

VII. Bonds Advantages: - Additional funds - Direct loan (from the funds owners) - The bonds owners are not involved into decision process - The loan contract is not negotiated Disadvantages: - Periodically coupon payment - Loan repayment - Cupon rate level

VII. Bonds Bonds: - Guaranteed - By mortgage - By pledge - Nonguaranteed Bonds: - Corporate - Issued by central and local authorities

VII. Bonds Corporate bonds: - With mortgage - Asset-backed - Callable - Puttable - Convertible - Floating - rate - Reverse floaters - Pay-in-kind - Catastrophe - Indexed

VII. Bonds Government: - Treasury - bonds - Treasury - notes - Treasury - bills

VII. Bonds Municipal bonds: - General - With income Short term: - Notes before tax - Notes before incomes - Notes before bonds

Source:

Corporate bonds Source:

Municipal Bonds Source:

Government Bonds Source:

International Bonds Source:

Bibliography Anghelache G. (2004), Piaţa de capital. Caracteristici. Evoluţii. Tranzacţii, Editura Economică, Bucureşti Bodie, Z., A. Kane, and A. J. Marcus (2007), Essentials of Investments, 6th edition, McGraw Hill International Edition