Bond Features
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What purpose does the variety in bond features (types and characteristics) serve?
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What purpose does the variety in bond features (types and characteristics) serve?
Bond Maturity
Unlike stocks, bonds have finite lifetimes. The issuers of bonds determine the lifetimes before they sell the bonds to investors.
The date on which a bond comes due is called its maturity or maturity date. This bond feature will tell how long would the bond issuer's obligation be and when the investors can expect their principal amount invested back.
Callabilitiy
Callability is a bond issuer's privilege of redeeming its bonds early before they are ready to mature.
This bond feature will help the firm to save interest expense when interest rates are falling. When interest rates fall, they may want to replace any high-yielding bonds with newer, lower-yielding bonds.
Put Provision
A put provision allows the bondholder to redeem a bond at its face value before it matures. This bond feature will help the investors to do this when ...
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