H.

K INSTITUTE OF MANAGEMENT STUDIES

AND RESEARCH

SECURITY ANALYSIS AND PORTFOLIO

MANAGEMENT

PRESENTING BY
SANA AFZAL SHAIKH (A38)

UNDER THE GUIDANCE OF

DR. PROF. NAVEEN SRIVASTAVA

TOPIC NAME
CHARACTERISTICS OF BOND AS A SECURITY
CHARACTERISTICS OF BOND AS A SECURITY

BONDS:

"A bond is a debt investment in which an

investor loans money to an entity which
borrows the funds for a definite period of
time at a variable or fixed interest rate’’
 TYPES OF BONDS

Convertible bonds:-
These bonds can be converted into a certain number of
shares of the same company at some fixed ratio in a
particular date.

Callable bonds:-
It contains a provision that gives the issuer the right to
call back the bond before its maturity date.

Secured bonds:-
These have specific assets of the issuer pledged as
collateral for the bond. It can be issued by real estate
or other assets.
 TYPES OF BONDS

Unsecured bonds:-
These bonds are not backed by any specific asset of
issuer. More easily issued by a company that is
financially sound.

Government bonds:-
It issued by govt. in its own currency. When issued in
foreign currency then it a referred as sovereign bonds.

Term bonds:-
It will mature at a single specified future date.S erial
bonds:-Bonds that mature in installments.
 BOND ISSUERS

There are 3 main categories of bonds:-

1) Corporate bonds are issued by companies. They are

high risk than government bonds.

2) Municipal bonds are issued by states and

municipalities. They can offer tax-free coupon income
for residents of those municipalities.

3) U.S. Treasury bonds (more than1-10years to

maturity),where as bills ( less than 1year maturity) are
collectively referred to as simply "Treasuries’’
 CHARACTERISTICS OF BONDS

1. Face value:-
The price of a bond when first issued.

2. Coupon rate: -
The periodic interest payments promised to
bondholders are a fixed percentage of bonds
face value or simply the interest rate.

3. Maturity:-
The time until the principal is scheduled to be
repaid.
 CHARACTERISTICS OF BONDS

4. Call provisions:-
Some bonds contain a provision which enables the
issuer to buy the bond back from the bondholder at a
pre-specified price.

5. Put provision:-
Some bonds contain a provision due to which the buyer
can sell the bond at a pre-specified price before its
maturity date.
 CHARACTERISTICS OF BONDS

6. Tenure of Bonds
Tenure or term refers to the period after which bonds mature. These
are financial debt contracts between issuers and investors.

7. Credit Quality
The credit quality of a bond refers to the creditors' consenson the
performance of a company's assets in the long-term. It is determined
by the degree of confidence that investors have in an organisation's
bonds.

8. Tradable Bonds
Bonds are tradable in the secondary market. The ownership can thus
shift among various investors within a given tenure. These creditors
often sell their bonds to other entities when market prices exceed
the nominal values.