One thought on “What are some different types of bonds?

  1. Arti says:

    Instead, their par value—the amount they pay back to the investor at the end of the term—is greater than the amount paid by the investor when they purchased the bond. The example above is for a typical bond, but there are many special types of bonds available. Convertible bonds, on the other hand, give the bondholder the right to exchange their bond for shares of the issuing company, if certain targets are reached. For example, zero-coupon bonds do not pay interest payments during the term of the bond. Many other types of bonds exist, offering features related to tax planning, inflation hedging, and others. Fixed Income Essentials Fixed Income Essentials Fixed Income Essentials To illustrate, consider the case of XYZ Corporation. To illustrate, consider the case of XYZ Corporation. Under the terms of the bond, XYZ promises to pay its bondholders 5% interest per year for 5 years, with interest paid semiannually. Each of the bonds has a face value of $1,000, meaning XYZ is selling a total of 1,000 bonds. Instead, XYZ decides to raise the money by selling $1 million worth of bonds to investors. XYZ wishes to borrow $1 million to finance construction of a new factory, but is unable to obtain this financing from a bank.

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