Bonds

Day Count Convention In Bonds

Day-count convention is used to calculate accrued interest between coupon payments. This convention helps to determine the number of days between payment, thus helping with calculation of how interest is accrued over a period. This convention dictates how the period between payments is calculated, by deciding numbers of days in Read more…

Bonds

Bond Investors

There are two categories of bond investors, big firms and individual investors. Institutional Investment funds such as mutual funds, money market funds, and ETFs Pension funds Insurance companies Banks Hedge funds Monetary authorities (central banks) State and local governments Foreign governments and other overseas entities Retail Individual users can opt Read more…

Bonds

Bond Credit Rating

Credit Rating Reliability of a bond issuer. Credit ratings are usually inversely related to return on investment. Credit risk models rely on both characteristics of bond and the issuer/borrower Third party credit rating agencies providing this service are Moody’s, Standard and Poor’s (S&P), and Fitch.  CRAs perform analysis of bond Read more…

Bonds

Yield Spread Of A Bond

A yield spread is the difference between yields on differing debt instruments of varying maturities, credit ratings and risk, calculated by deducting the yield of one instrument from anotherA yield spread is the difference between yields on differing debt instruments of varying maturities, credit ratings and risk, calculated by deducting Read more…

Bonds

Bond Yield

* ) Calculation of all the coupons * ) Calculation of all the coupons * ) Difference between par and discount/premium * ) Market prices of bonds are expressed in terms of yields, which make the bond called expensive or cheap. *) Yield has an inverse relation to bond price. Read more…