Bonds

Types of Government Bonds

Treasury bills: “T-bills” have the shortest maturities — 13 weeks, 26 weeks, and one year. You buy them at a discount to their $10,000 face value and receive the full $10,000 at maturity. The difference reflects the interest you earn. Treasury notes: These mature in two to 10 years. Interest is paid semiannually at a fixed rate. Minimum investment: $1,000 or $5,000, depending on maturity. Treasury bonds: These have the longest maturities at 10 years. Read more…

Bonds

Types of Bond Issuers

Central Governments Sovereign Debt (Sov Debt) means any debt government has guaranteed. This not only include the debts/obligations/securities but also obligations by any of its department/ministries. Nearly all governments require a constant flow of borrowed funds in order to pursue their policies. Even in developed economies, successive budget deficits build up a large stock of outstanding debt that must be refinanced or serviced. Although some countries reduce borrowing during periods of budget surpluses, they never Read more…

Bonds

Dirty Price of a Bond

Dirty Price is the price of the bond, plus part of coupon the seller expects in form of accrued interest for holding the bond for certain days.┬áIn most of the European markets, bond prices are quoted in dirty price, and this is what a buyer has to pay to procure a bond. Dirty price is calculated on the basis of settlement date of purchase (T+2, T+3 etc). Clean Price here is the price of the Read more…

Bonds

Clean Price Of A Bond

Clean price: To avoid the impact of the next coupon payment on the price of a bond, this cash flow is excluded from the price of the bond and is called the accrued interest. Coupons are just the compensation for keeping them Clean prices are affected by interest rates and credit ratings or companies Bonds are quoted as either a percentage of their par value, or face value, or in dollar terms. For example, if Read more…