By Patrick J. Brown
This publication offers an advent to the bond markets for practitioners and new entrants who have to comprehend what they're, how they paintings and the way they are often used, yet don't want to be intimidated through mathematical formulae. by way of the top of the ebook readers might be capable of make a decision even if to take a position within the bond marketplace. The mathematical formulae may be relegated to the appendices and supplemented by way of a spouse site which permits clients to go into their very own bond marketplace investments, to simulate expected occasions and notice the results.Patrick Brown is famous as Chairman of the eu Bond fee (recently retired)The basically bond publication that doesn't depend seriously on mathematical formulae
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Extra resources for An Introduction to the Bond Markets (The Wiley Finance Series)
Bonds are tradeable in units, referred to as their ‘denomination’. Some bonds are tradeable in very small units whereas others are not. g. 01 and French Government securities €1), whereas with those that are targeted solely at institutional investors, a denomination of $100 000 is not uncommon. The size of the bond’s denomination only restricts the quantity you are able to buy.
94 %. 3 Undated or irredeemable bonds Historically the UK Government and more recently other issuers have issued fixed-rate bonds without a final redemption date. The issuer has given a commitment to continue paying interest at regular intervals and has retained an option to redeem the bonds on giving suitable notice. Such bonds are known as ‘undated’, ‘perpetual’ or ‘irredeemable’ bonds. The latter term, which is used widely in the UK gilt-edged market, is obviously not strictly correct as the issuer has the right to redeem the bonds on suitable notice.
The interest is paid semi-annually initially on 18 April and 18 October each year. The annual interest rate for each semi-annual period is set in advance at 14 % below the London Interbank Offer Rate for six month dollar deposits, but subject to a minimum of 5 % and a maximum of 8 %. In this example the calculated interest rate, if it was in the permitted range, was below the London Interbank Offer Rate. 1 Undated or perpetual floating-rate notes A number of issuers, although in the main banks, have issued either hybrid fixed-rate and floating-rate or just floating-rate undated or perpetual issues.
An Introduction to the Bond Markets (The Wiley Finance Series) by Patrick J. Brown