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Unique Bonds

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Create an idea of an unusual bond and analyze its features.

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Solution Summary

This solution creates unusual bonds and analyzes its features. Bond 1 is based on weather conditions and bond 2 is based on the harvesting season (agriculture).

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Bond Type 1:
Create a bond that pays out a dividend based on weather conditions (for example rainfall). This type of bond would be of interest to farmers as a tool to raise money allowing them to buy farming equipment, fertilizer and seed and make payments based on the success of their crop. The buyers of these bonds would be regular investors looking to diversify their portfolio, speculators, and also farmers.

Example:
A farmer in Colombia sells this bond in order raise money to buy farm equipment. The dividend to be paid by the farmer will depend on the rainfall, increasing if the rainfall is high and decreasing when the ...

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