Abstract
The terms “securities market” in Viet Nam is quite strange to the public while in many countries in the world, it have been developing dynamically. The securities market has its own attraction because of its important role to a national economy and interest for investors. Investing and growing securities market is one of the best ways to enrich our economy and create many opportunities for us. It can be only flourished if there are lots of investors with enough knowledge about securities. This report will provide some information about securities market in Viet Nam, make clear kinds of securities and introduce some major participants in Viet Nam capital market. Realizing the importance of securities market, we should spend more
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Yields on municipal bonds are often lower than corporate or Treasurybonds with comparable maturities, because of the important advantage of not being taxed at the government level. The feature of this bond is low default risk, may be exempt from local authorities taxes and not very attractive.
c. Corporate bond
A type of bonds is issued by a corporation.Corporate bonds often pay higher rates than government or municipal bonds, because they tend to be riskier. The bondholder receives interest payments (yield) and the principal, usually 100,000VND, is repaid on a fixed maturity date (bonds can mature anywhere between 1 to 30 years). Generally, changes in interest rates are reflected in bond prices. Bonds are considered to be less risky than stocks, since the company has to pay off all its debts (including bonds) before it handles its obligations to stockholders. Corporate bonds have a wide range of ratings and yields because the financial health of the issuers can vary widely. The most popular types of this bond is convertible bonds. However, nowadays, many corporations choose to issue floating rate bonds; MOF estimated that there were about 18,000 floating rate bonds are issued in 2011. The feature of this bond is time saving, reducing cost
1. Briefly explain why many corporations prefer to issue callable long-term corporate bonds rather than noncallable long-term bonds.
Even though these products are issued as long-term securities, they have many of the same features as traditional short-term ones. These debt products are both callable and puttable which gives the issuer as well as the investor flexibility. The call feature allows the issuer to buy back the bond. For issuers who are not sure how long they will need funds, they can get out of the agreement by calling the bond. Same goes for the investor; they can exercise the put option and receive their money back. In order to make these products more liquid, investment banks are used as remarketing agents. These agents resell the bonds at new rates to other investors. However, there is a cap on how high the rates on the bonds can be reissued at in order to limit the coupon payments. These variable rate debts also track the JJ Kenny index. The JJ Kenny index is an index similar to the S&P 500 but for municipal bonds. Also, a synthetic fixed rate debt can be created from combining a variable rate debt and a SWAP. Given the two proposals, the state is faced with three forms of debt. The first form is a fixed rate option that would provide the state with 20 year serial issued bonds with fixed
Moderate risk. Purchasing a bond means giving a loan to a company. “T-Bonds” are bonds issued by the U.S. Treasury and are safer than corporate bonds. (Loaning money to the government is safer than loaning money to a private business.)
An investment in a tax-exempt (municipal) bond with an interest rate of 8 percent is preferable to an investment in a taxable (corporate) bond with an interest rate of 10 percent.
The bonds can be issues with fixed interest or variable rate interest, each of which has its advantages and there disadvantages.
Convertibles are appealing to investors who are looking for an investment with greater growth potential than that offered by a traditional bond. By purchasing a convertible bond, the investor can still receive
Credit rating agencies take a wide range of factors – debt raising purpose, industry outlook, corporate profile and financial measures into account when performing corporate bond
Second City Options (SCO) is a small firm that specializes in option trading. Employing 35 people, SCO is located on LaSalle Street in the Chicago financial district. It is a member firm of the Chicago Board Options Exchange (CBOE), where it trades options on stocks and stock indices. It is also a member firm of the Chicago Mercantile Exchange Group (CME Group), where it trades options on futures and the underlying futures contracts.
It is because TECO sells bonds at par and sets the coupon rates at the market rate of interest when the bonds are issued, interest rates have risen over the last 25 years, and that explains the rising pattern of coupon rates.
The advantage to choosing a convertible bond for financing is that "they provide issuers with cheap' debt and allow them to sell equity at a premium over current value". Jen, Choi, Lee (1997).
It provides an evaluation of the bond issuer’s financial strength and ability to pay back the bond’s principle and interest. The bond rating also provides investors with some sense of security when investing in a particular firm. A higher bond rating implies a lower likelihood for the firm to default. Investors would feel more secured investing in such a bond, thus demanding a relatively lower rate of return. As such, high rated bonds enable the issuer to enjoy a lower cost of borrowing. A lower bond rating, on the other hand, serves as a negative signal to investors on the firm’s ability to repay debt obligations.
Bond’s with collateral will have lower coupon rate as bondholders have claim on collateral no matter what. It provides an asset which lowers default risk. Downside to company is that this collateral cannot be sold as an asset and needs to maintain it.
1a: The key players in the market; and the types of investments available to both individual investors and institutional investors,
A bond is debt to whoever sells the bond to an inventor. If you buy an IBM bond, you are loaning money ($1000) to IBM instead of a bank loaning money to them. Just like a bank, you are going to charge IBM interest on your money, as well as a return of principle when the loan is due (ten years later). The company does not go to the bank to borrow the money, because the bank will rate the company as a high risk company. Hence, banks are really tight with their money. High yields bond investment relies on an credit analysis in that it concentrates on issuer fundamentals, and a "bottom-up" process. It focuses more on "downside risk default and the unique characteristics of the issuer. In a portfolio of high yield bonds,
To start off, a critical response needs a critical analysis. Responding to something after research and finding more information on a topic is a critical response. The response itself is putting it into a form from ideas and brainstorming to essays. That is what critical response is, for example in English 100 I was given an article to analyze on E-waste. I had no knowledge in that case nor did I put to account that we would ever face a problem like that, disposing computers and electronics. But there was more to that than you can think, the basic idea of that concept could lead to many ideas and deep thinking on what happened to that topic. After constant research I and putting it into a critical response I came up with my research essay. The response itself cannot come without a critical analysis these words cannot come to be without one another. As mentioned in class.