BONDS AND ITS TYPES


BONDS

In finance, a bond is an instrument of indebtedness of the bond issuer to the holders . Its an   Long term contract. Generally issued with maturities in the long term of 20 to 30 years and in short terms 7 to 10 years.  Agreement pay interest + principle amount on specific dates.    It is advertised in the newspaper . Offered to general public and investors

TYPES OF BONDS

1-     Mortgage bond
2-     Debentures
3-     Subordinated debentures
4-     Income bond


 A mortgage bond is a bond secured by a mortgage or pool of mortgages. These bonds are typically backed by real estate holdings and real property such as equipment. In a default situation, mortgage bondholders have a claim to the underlying property and could sell it off to compensate for the default.


Debenture is a long-term security yielding a fixed rate of interest, issued by a company and secured against assets. Unsecured bond. No legal binding on specific property right. Debentures holder (DH) general creditors who claims are protected by property

·        Subordinated debt is a loan or security that ranks below other loans or securities with regard to claims on assets or earnings. Subordinated debt is also known as a junior security or subordinated loan

·        An income bond is a type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments paid only if the issuing company has enough earnings to pay for the coupon payment.


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