Fixed Interest Securities Flashcards
1
Q
What are they
A
Debt instruments
Long term investments
Pay fixed interest rate annual (coupon - don’t vary with external factors)
Co issuers (borrower)
Investor acquires (lender)
2
Q
What is a coupon
A
Fixed interest rate (same from outset) based on notional amount
Known from outset (time at purchase)
Paid regular intervals (semi annually)
Ie - 6% on 100,000 NA = £6000 interest
3
Q
What are the main groups of FIS
A
Gov bonds
- domestic or overseas
- gov finance in deficit so need additional source of finance
Corp bonds
-issued by Co’s to raise finance
Eurobonds
-issued and traded outside the jurisdiction of the country whose currency bond is denominated
4
Q
How to companies raise capital
A
Share issues
MMIs
Bank borrowing
Corp bonds
