Advantages And Disadvantages Of Investment Bonds

Stocks and Bonds are different in many ways. A stock is a portion or share of the ownership of a corporation. A share will give the owner of the stock the company’s profits or loses over time. The good thing about stocks is they can be sold at almost any time as long as there is someone willing to buy. A bond, on the other hand, is a fixed interest financial asset issued by governments, companies, banks, and other large entities. Bonds also are called funds. Bonds pay the owner a fixed amount a specific date, or on specified dates depending on the type of bond. If the bond is a discount bond, then there is one pay date at the end. If the bond is a coupon bond, then it pays a fixed amount over a

The holder of bonds becomes a creditor to the company and is entitled to a first claim on the earnings of the company.

Bonds are built on debt instead of equity. They promise to pay the principal amount of the bond on a specific date. So basically, it makes the owner a lender and only pays interest to the owners/bondholders. It also requires that the owner pay a fixed interest payment every six months. A large majority of corporations do not issue bonds.

Series EE bonds cannot be bought or sold in secondary market. These bonds have a guarantee from the U.S. government to at least double in value over the first term of the bond. The first term usually lasts for 20 years, but most EE bonds have an interest-paying life that extends an additional 10 years past that term. Interest income from EE bonds are exempt from state and local taxes, and coupon rates are assigned based on a certain percentage value of long-term Treasury rates. Much like EE bonds, series I bonds are non-marketable. Unlike EE bonds, they do not come with a guarantee to at least double in value over the initial term of the bond. Instead, I bonds come with a fixed coupon rate and receive an additional inflation-adjusted interest rate that is adjusted semi-annually. Stocks are a shared ownership of a company. Stocks are a claim on that company's assets and earnings. The more stocks you buy from a company the more of that company you own. Once you buy a stock you become a shareholder and you also receive a stock certificate. You can also sell your stock on the stock market. So if your own a stock while the company grows your share is more valuable which allows you to make a profit off of

c) Bond: for meeting long term requirements firms or governments issues bond certificates maturing from 5 to 30 years. Bonds are of two types, floating bonds and fixed rate bonds. The interest rate on floating bond

Coupon Bond - Coupon bonds are unregistered and coupons are attached to the bond and the single interested has to be payee by the payable, also the coupon is been submitted semi annually. Coupon bonds are also known as bearer bonds (Adair, T.A. Jr., Cornett, M.M., Nofsinger, J., 2015).

if possible, begin this lecture by showing students an actual bond certificate. We show a real coupon bond with physical coupons. These can no longer be issued--it is too easy to evade taxes, especially estate taxes, with bearer bonds. All bonds today must be registered, and registered bonds don't have physical coupons.

The total return on bonds consists of both variations in prices and interest payments. Increase in interest rates negatively affects the bond fund as it leads to drops in the value of bonds. Even though the rates increase, the bonds will continue receiving interest payments due to the bonds held which are regularly passed to the investors. Investors in bond funds delight in good management and diversification of assets.

company or business for a set amount of time. A bond issuer such as the US Treasury first decides that they

Bonds act as an investment instrument which the investors invest their money to the bonds and bonds can provide a means of preserving capital and earning a predictable return. While many investments provide some form of income, bonds tend to provide the highest and most reliable source of income. Even at the time of low interest rates, there are still plenty of options (such as high-yield bonds and emerging market bonds), investors can use it to construct a portfolio that will meet their income needs. The most important thing is diversified bond portfolio can provide decent yields with lower volatility than equities and higher income than money market funds or bank instruments. Thus, for those who need to live off of their investment income bond is a popular choice.

If Corporation X wants to build a new plant for $1 million it might be better for everyone to issue bonds to finance it. If the firm issues 1,000 bonds for $1,000.00 each it can build the plant. Maybe Corporation X has poor credit and must pay 15% for a 3 year bond. If the plant is expected to produce $1 million of extra revenue per year, this is a bargain. It may take a year to build the plant and get it running. However, if the revenue from a year two can retire the debt entirely, it is mutually beneficial for everyone.

The automotive industry is capital-intensive and Ford is no exception. When it needs extra cash and liquidity Ford taps the debt-markets. Automobile companies also need funding for their credit subsidiaries in order to offer financing to car buyers and leasers. Investors purchase bonds of a company and are referred to as debt-holders of the company. Should a company go bankrupt, these debt-holders then enjoy precedence over shareholders because the company must honor its debt before paying its shareholders. Although bond prices are highly dependent on interest rates, many people still consider bonds somewhat more secure than stocks, although this does not always hold true. Currently, two Ford companies issue stock – Ford

The nature of bond is to growth with a little risk. The nominal bonds can be divided into two type the government bond

Cities, states, the federal government, and corporations issue bonds to raise capital for purposes such as building roads, improving schools, opening new factories, and buying the latest technology. Individual bonds can help provide stability for investor’s portfolio. By diversifying your investments across different asset classes—such as stocks, bonds, and cash—an investor can balance his risk versus potential return. Investors also use fixed income for savings and to generate income.

The bond market is one of the fixed-income markets that it is deals in with transaction of long term fixed-income securities. Moreover, the bond is one of the financial instruments and then the financial instruments are generally regarded as securities. In the bond market, there are two bonds familiar to mass investors. One is called government bonds, and another one is called corporate bonds. Firstly, as its name, government bonds are issued by government with maturities up to about 30 years. Usually, medium term bonds and long term bonds pay out fixed amounts of coupon payments in semi-annually during the repayment period. But, the index-linked bonds pay out alterable amounts of coupon payments in semi-annually because of the changes in inflation. The reason of government bonds are always have a lot of attraction to investors is that investors are generally referred to government bonds as bonds being free from default risk. With this characteristic, government bonds are safer than most other financial instruments to invest. However, the high return always with the high risk and vice versa that government bonds offers lower yields. Secondly, the corporate bonds is the another one that are concerned more by investors in daily transaction activities. There are three main sources for corporates to raising finance for their investment projects, they are: retained earnings, non-marketable debt