|
Zero coupon bonds
are so called because no periodic coupons are paid during the life of the
bond. Zero-coupon bonds are normally sold at a discount, meaning at a price
lower than its face or par value so that the investor earns from the
difference between the discount price and the face value when the bond
matures. Zero-coupon bonds can also be issued at face value with an agreed
accrued interest to be paid upon maturity.
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.
|
