Bonds are a form of debt investment, in which an investor loans money to an entity for a defined period of time at a fixed or variable interest rate.
While bonds are widely regarded as one of the safest forms of investment, the decreased risk brings with it lower returns. Here at Equitrade Capital we offer access to both Government and Corporate Bonds, using them in the construction of Income portfolios, or as a low risk store for a portion of your funds.
Bonds Key Terms
Principle (Face Value) – The face value of a bond is the amount of money the bond-issuer owes to the bondholder upon maturity.
Market price – Dependant on demand in the secondary market, the resale price of a bond may be higher or lower than its original face value. This is called the market price.
Maturity – The maturity is the date on which the principal amount of a bond is to be paid in full, after this date you will no longer receive interest payments from the bond, and your contract with the issuer is over.
Coupon rate – The coupon rate is the annual interest rate paid on a bond, expressed as a percentage of the original principle. Coupons can be paid either yearly or half yearly dependant on the bond in question.
Current Yield – The current yield of the bond is the sum received from the bond divided by the market value of the bond. Unlike the coupon rate, bond yields will fluctuate based on supply and demand.