Important Points for IC 99 - Asset Management Exam
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Types of bonds include : i) Straight Bonds, ii) Mortgage Bonds, iii) Subordinate Bonds, iv) Convertible Bonds, v) Income Bonds, vi) Zero Coupon Bonds, vii) Floating Rate Bonds, viii) Puttable Bonds, ix) Junk Bonds
A Zero-coupon Bond (also known as Discount bond or Deep Discount Bond) is a bond bought at a price lower than its face value, while it is repaid at the face value at the time of maturity.
Coupon rate : It is another name of interest rate. This term comes when interest is paid by clipping a coupon from the bottom of the bond certificate.
Bond prices are determined by 5 factors : i) par value, ii) coupon rate, iii) prevalling interest rates, iv) accrued interest, v) credit rating of the issuer
When interest rates rise, bond prices decline, and vice versa.
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