A premium bond is a fixed-income security that trades at a price higher than its face value. This occurs when the bond's coupon rate, or the interest rate it pays, is higher than the current prevailing interest rates in the market. In essence,
Instruments
Discount Bonds: A Deeper Dive into Tax-Efficient Investing
Discount bonds offer a unique investment opportunity, especially for those seeking tax efficiency and potential capital appreciation. Unlike traditional bonds that trade at par value, discount bonds are priced below their face value, providing a
Variable-Rate Bonds: A Flexible Investment Option
Variable-interest or variable-rate bonds, also known as floating-rate bonds, are debt security types that offer a unique investment opportunity. Unlike traditional fixed-interest bonds, where the interest rate remains constant throughout the bond's
Fixed-Rate Bonds: A Steady Investment
Fixed-rate bonds offer a reliable way to invest and generate consistent income. They are debt securities that pay a fixed interest rate over their entire term. You'll receive regular interest payments and the principal amount at maturity. Let's delve
Zero-Coupon Bonds: A Unique Investment
Zero-coupon bonds are a distinctive type of debt security that offers a unique investment opportunity. Unlike traditional bonds that pay periodic interest payments, zero-coupon bonds do not make any interest payments throughout their term. Instead,
Currency Option Bonds: A Comprehensive Guide
Currency option bonds are financial instruments that allow investors to receive payments in multiple currencies. They provide a unique opportunity to manage currency risk and potentially optimize returns. How currency option bonds work When you
Dual-Currency Bonds: Features, Benefits, Risks, Types
Dual-currency bonds are a specialized debt instrument offering a unique blend of domestic and foreign currency features. They are issued in one currency, typically called the base currency, but interest payments are made in a different currency,
Securitized Bonds: Meaning, Types, Benefits
Securitized bonds are bonds where coupon and interest payments come from a collection of other underlying assets. For example, a bank pools its mortgage into debt securities. This security is what we call securitized bonds. In a simple model of
Bonds: Types, Features, Risks, Pros, and Cons
What's it: Bonds are debt securities with a promise to pay back the principal at maturity and pay coupons regularly. They usually mature in more than 10 years. And we distinguish them with notes, which are 10 years or less mature. Next, there are