Bond Market

Understanding Portfolio Diversification with Bonds to Reduce Risk Portfolio diversification is a core principle of investing that promotes the practice of spreading investments across various financial instruments, industries, and other categories to mitigate potential risks. For investors, bonds serve as a significant method to incorporate this diversification strategy. This comprehensive guide aims to explain how …

The Concept of Coupon Rate in Bonds Before we delve into the details of the coupon rate, it is essential to preface the discussion with some context about bonds. A bond is a type of debt security that investors purchase from issuers such as corporations and government entities. When you purchase a bond, you are, …

Understanding Bond’s Maturity In the realm of finance and investment, “bond’s maturity” is a term you are likely to encounter. But what exactly does it mean? The maturity of a bond refers to the precise future date at which the investor’s principal amount will be repaid. That indicates the bond has reached its lifetime and …

Understanding What is Bond Yield Introduction To understand bond yields, we must first delve into the concept of bonds. Bonds are essentially loan agreements between an investor and an issuer (commonly a country or large organization). The issuer borrows capital from the investor, in turn agreeing to pay back the borrowed value plus interest over …

Understanding the Key Features of a Bond Introduction A bond represents a loan that an investor makes to a borrower, typically a business or government. When investors invest in bonds, they are essentially lending their money to the bond-invoking entity for a pre-calculated period, during which the entity pays interest to the investors. Once the …

Understanding Perpetual Bond A perpetual bond, also known as a consol or perpetuity, is a fixed income security with no maturity date. This means the holder of such bonds receives interest payments indefinitely. Structure of a Perpetual Bond Perpetual bonds are structured as coupon or interest-only investments. The issuer of these bonds commits to making …