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Bond Fundamentals

|Includes: Investment Technology Group Inc. (ITG)
Fixed Rate Bonds: These are the bonds that carry a fixed interest rate declared at the time of issuance and remain same till the maturity.
Floating Rate Bonds: These are the bonds that have an interest rate that is linked to some reference rate or independent index.
Deep Discount Bonds: These are the bonds that are issued at a discounted and at the maturity. The investor gets the face value of the bond. Such bonds are also known as the zero coupon bonds.
GILTS: Fixed interest bearing instruments issued by the government to raise money from the public. In India RBI issues these on behalf of the Indian government.
Commercial Paper: These are short unsecured term financial instruments issued by the corporate bodies to meet short terms needs like working capital. These instruments have maturity period between three months to one year. Anyone can subscribe to these papers.
Certificate of deposit: These are unsecured promissory notes with maturity period of 91 days to one year and are issued by the schedule banks.
Corporate debentures: These are debt instruments secured and unsecured, issued by corporate bodies for period of 18 months and above. These unlike many other products are transferable instruments.
Public Sector Bonds: These are the bonds that are issued by the public sector companies. Public sector companies are those where the government has controlling stake in the company.
Tax Saving Bonds: The bonds that provide tax breaks u/s 88 are known as tax saving bonds. These are used for tax planning purposes.
Growing Interest Bonds: These are the bonds whose rate of interest increase over the time to keep the investors invested in the instrument.
Education Bonds: These are the bonds that are issued for the expansion or other purposes for the education sector.
Deferred Income Bonds: These are the bonds that provide interests after a deferment period. These bonds are seen as good one investment options that a person who is to retire soon.
Inflation Hedge Bonds: These are the bonds whose interests are linked to the inflation in the economy. These bonds provide a very effective tool to fight with the inflation.
Coupon Rates: The rate of interest an investor will earn from the bonds. These are fixed at the time of issuance.
Maturity Date: This is a date on which the bond will mature. In this date the investors are expected to receive whatever the bonds have earned for them.
Yield: The effective return from the bonds is called the yield.

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