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The coupon rate of
a straight bond is fixed for the entire life of the bond. In contrast, the
coupon rate of a floating rate bond is pegged to an agreed benchmark, such
as the KLIBOR (Kuala Lumpur Interbank Offered Rate) and as this reference
rises and falls, the coupon rate also moves accordingly.
Remarks: Corporate Bonds or loan stocks are long term
fixed interest income debt securities income debt securities issued by
companies. They usually have a lifespan of five years and are redeemable at
par value on maturity. Bond and loan stock issues vary in many ways and have
many optional features. Some are secured by collateral, others are backed by
guarantees; yet others have no collateral support and are only unsecured
promises to pay. In addition, the bond indenture may provide that the bond
may be redeemable at a specified price.
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