Description
Bonds are debt securities that can be issued by corporations, governments or municipalities, allowing these entities to obtain funds directly from financial markets. The issuer agrees to repay the principal plus interest (also called coupon).
Find hereafter Bonds key concepts:
- Face value: the amount on which the issuer pays interest and which has to be repaid at the end of maturity
- Coupon: the interest rate that the issuer pays to the Bond holder (investor). The coupon can be a fixed amount throughout the life of the Bond; or a variable amount in case pegged with an index (e.g. Euribor) plus a spread
- Maturity: the date on which the issuer has to repay the face value
- Number of coupons: The number of coupons paid by the issuer to the bondholder between the issue date and maturity date
- Issue Price: the price at which investors buy Bonds when issued
- Yield: the measurement in % of the cash returns to the Bond holder
