Summary on `Bonds` Chapter

p Summary on the bonds ' chapter

A bond is a promise to pay a certain amount of money at regular intervals or at maturity or both to the holder of the bond . These are one of the key elements of our financial system which are designed to facilitate not only government and corporations but also individuals Loans , mortgages , credit card facilities are all forms of bonds

Types of bonds

There are four types of bonds : Zero Coupon Bonds , Fixed Payment loans Coupon Bonds and Consols . Each of these has different characteristics

which determine the price at which an individual would be willing to obtain them

A zero coupon bond is also known as pure discount bond . These bonds do not give annual or semi annual payments to the bond holder for holding it but only a payment of the coupon price of the bond at the maturity date

The second type of bond is the fixed payment loan . In these types of bonds , the bondholder is entitled to receive a fixed portion of the principal along with interest until the maturity date of the bond

The third type of bond is the coupon bond . The bondholder of the coupon bond receives not only coupon payments at each interval but also the face value of the coupon at maturity date

The fourth type of bond is consols , also known as perpetuities Bondholders are entitled to receive a fixed coupon payment forever and are not paid the face value of the bond as...