Bonds Characteristic
Lets find out more about Bonds characteristics as below:
* Nominal Value (Face Value) is the principal of a bond’s value to be received by holders of bonds on the bond matures.
* Coupon (the Interest Rate) is the value of interest received by the bondholders (the prevalence of bond coupon payments are every 3 or 6 months) Coupon bonds are expressed in annual percentages.
* Maturity (Maturity) is the date when the bondholders will receive principal payment or the value of the bond. The maturity date of the bond varies from 365 days to more than 5 years. Bonds that will mature within one year will be easier to predict, so have the risks are smaller than the bonds that have maturity period within 5 years. In general, the longer the maturity of a bond, the higher the coupon / interest.
* Publisher / Issuer (Issuer) Knowing the bond issuer is a very important factor in bond investing. Measuring the risk / likelihood of publishers bond can not make a payment coupon or principal amount on time (called default risk) can be seen from the rankings (ratings).
Instead of Bonds, some sort of other investments such as mississauga real estate are considerable as well. Real Estate business have been rapidly increase and showing a good prospect for long investment.
Unlike the stock price is expressed in the form of currency, bond prices expressed in percentages (%), ie the percentage of its nominal value.
There are 3 (three) possible market price of the bond issue, namely:
* Par Bond’s price equal to the nominal value
* At a premium: Bond prices greater than face value
* At discount: Bond prices lower than the nominal value
Yield Bonds:
Income or yield, or return to be derived from investment expressed as a yield bonds, which results to be obtained if the investors put their funds to buy bonds. Before deciding to invest in bonds, investors should consider the amount of bond yields, as a gauge factor of annual returns will be accepted.
There are 2 (two) terms in determining the yield of current yield and yield to maturity.
*Current yield is the yield calculated based on number of coupons received during one year to the price of the bonds.
* Meanwhile yield to maturity (YTM) is the rate of return or income that would be obtained if the investor has a bond until maturity.