Bonds & Fixed Income
4 terms
Perpetual Bond
Bonds & Fixed Income
₹
A bond with no maturity date, paying interest indefinitely unless the issuer exercises a call option.
Price = Annual Coupon / Required Yield, for a perpetual stream with no redemption
Primary Dealer
Bonds & Fixed Income
qualitative
An institution authorised by the Reserve Bank to underwrite and make markets in government securities.
Test: the entity holds a Reserve Bank authorisation, bids in primary auctions and quotes two-way prices in the secondary market
Principal
Bonds & Fixed Income
₹
The face amount a bond issuer borrows and must repay at maturity, on which interest is calculated.
Coupon Payment = Principal x Coupon Rate / Number of Payments per Year
Puttable Bond
Bonds & Fixed Income
qualitative
A bond the holder may sell back to the issuer before maturity, at a stated price on stated dates.
Test: the terms give the holder an option to require early redemption at a specified price and date