Straight bond with fixed coupon rate
STRAIGHT BOND is the most common debt security. All other bond types are variations of, or additions to standard straight bond features. An investor pays a single capital sum to receive interest payments, called coupons, until a fixed maturity date when the last coupon is accompanied by redemption of the bonds face value.can be viewed as a straight fixed rate bond with the addition of a call option A stripped bond is a zero coupon bond that results from stripping the coupons and straight bond with fixed coupon rate
value. Additionally, investors are usually willing to accept a lower coupon rate of interest than the comparable straight fixed coupon bond rate because they find the call feature attractive. Bonds with equity warrants can be viewed as a straight fixedrate bond with the addition of a call option (or warrant) feature.
Lower fixedrate borrowing costs. Lower fixedrate borrowing costs. Convertible bonds allow issuers to issue debt at a lower cost. Typically, a convertible bond at issue yields 1 to 3 less than straight bonds. Locking into low fixedrate longterm borrowing. Locking into low fixedrate longterm borrowing. To perform fixed rate bond valuation, we need to know the maturity, the bond's face value, the coupon rate, and market discount rates. Then, we apply the following formula.straight bond with fixed coupon rate Definition of STRAIGHT BOND: A bond that is noncallable, a fixed rate coupon on a bond in the euro markets, or a bullet repayment attached to a The Law Dictionary Featuring Black's Law Dictionary Free Online Legal Dictionary 2nd Ed.
The features of a straight bond include constant coupon payments, face value or par value, purchase value, and a fixed maturity date. A straight bondholder expects to receive periodic interest payments, known as coupons, on the bond until the bond matures. At maturity date, the principal investment is repaid to the investor. straight bond with fixed coupon rate In finance, a fixed rate bond is a type of debt instrument bond with a fixed coupon (interest) rate, as opposed to a floating rate note. A fixed rate bond is a long term debt paper that carries a predetermined interest rate. Yield to maturity includes the coupon rate within its calculation, and in general, These coupons are fixed; no matter what price the bond trades for, For example, a company may issue a floatingrate bond as Treasury bond rate 50 bps (100 bps 1), In such cases on every interest payment date, the payment will be made 0. 50 more than the treasury bill rate prevailing on the fixing date.Rating: 4.10 / Views: 379