CT 1 Investments Flashcards
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Fixed interest government bonds are?
These government bonds provide payments that are fixed in monetary terms.
Fixed interest government bonds.
A government or government body may raise money by floating a loan on a stock exchange.
- the terms of the issue are set out by the borrower and investors may be invited to subscribe to the loan at a given price ( called the “issue price”), or the issue may be by tender, in which case investors are invited to nominate the price that they are prepared to pay and the loan is then issued to the highest bidders, subject to certain rules of allocation.
Corporate bonds
These are similar to conventional government bonds in their characteristics.
The major difference between corporate bonds and government bonds are:
Corporate bonds are usually less secure than government bond. The level of security depends on the type of bond. The company which has issued it, and the term. The longer the term the bigger the risk.
Corporate bonds are usually less secure.
Debentures
Debentures are part of the long-term (loan capital) of companies. The issuing company provides some form of security to holders of the debenture.
Debenture stocks are considered more risky than government bonds and are usually less marketable. Accordingly the yields will be higher compared to those of government bonds.
Unsecured Loan stocks
Unsecured loan stocks are issued by various companies. They are unsecured- holders rank alongside other unsecured creditors.
Eurobonds
Eurobonds are a form of unsecured medium or long-term borrowing made by issuing bonds which pay regular interest payments and a final capital repayment at par.
Eurobonds are issued and traded internationally and are often not denominated in a currency native to the country of the issuer.
Eurobonds are issued by large copanies, governments and supra-nationall organisations. they are usually unsecured. Yields depend upon the issuer and issue size.
Certificates of Deposit
A certificate of deposit is a certificate stating that some money has been deposited. They are issued by banks and building societies.
Terms to maturity are usually in the range 28days to 6 months. Interest is payable on Maturity.
The degree of security and marketability will depend on the issuing bank.
Ordinary Shares
a
Preference Shares
a
Convertibles
a
Property
a
Derivatives
a
Futures
a
Options
a
Currency Swaps
a
