Debt securities, Financial Management

Assignment Help:
  • Fixed income security is a financial obligation of an entity, which promises to pay a pre-specified amount of money at per-specified date.

  • Debt securities (such as bonds, mortgage-backed securities, asset-backed securities and bank loans) at first sight appear less glamorous and exciting.

  • The face value or nominal value of the debt security can be thought of as the principal amount on which interest is paid by the issuer.

  • Bonds typically pay interest periodically at a pre-specified rate of interest.

  • Accrued income involves the recognition of revenue earned before it is actually received.

  • Embedded Option is part of the structure of a bond that provides right to both the parties (issuer and bondholder) to take action against each other party, as opposed to a bare option, which trades separately from any underlying security.

  • Cap is the restriction on the coupon from increasing; it is an unattractive feature for the investors.

  • There could be a minimum coupon rate specified for a floater. This rate is called a floor.

  • A floater can have both a cap and a floor. This feature is referred to as collar.

  • T-Bills are issued to enable the government to tide over short-term liquidity requirements with maturities varying from a fortnight to a year.

  • Bond indices exist for the reasons of managing portfolios and measuring performance, similar to the NSE, BSE, S&P 500 or Russell Indexes for shares.

  • Conversion ratio is the number which tells how many common shares (or preference stocks) will be received by the bondholder at the time of conversion. It is usually constant over the life of the security and protect against losses caused by the stock splits or large stock dividend.

  • Conversion value is the amount which investors can receive by immediately exchanging their bonds for equity shares and selling these shares at prevailing market price of the common stock.

  • The price at which convertible securities trade in the market is higher that the conversion value and straight value.

  • Call schedule shows the date and corresponding prices at which an issuer can call back bonds.

  • inking fund provisions is a pool of funds set aside to repay the debt. Under this, certain amount of money is kept aside every year from the profits. It is helpful to repay interest and the principal every year or at the end of the period.


  • Related Discussions:- Debt securities

    Determine the distribution to minimize the total cost, A pharmaceutical com...

    A pharmaceutical company, named "XYZ", plans to deliver trials to three different clinics (C1, C2, and C3). The trials are used for the emergency treatments so XYZ must fulfill all

    Business analysis, 1. Each student has been allocated one Australian compan...

    1. Each student has been allocated one Australian company. This information is available in the unit website. You should check that a company is assigned to you. 2. It is your r

    Kristie, Hi I have been working in this for 2 weeks now and I just can''t s...

    Hi I have been working in this for 2 weeks now and I just can''t seem to figure it out. ok lets say Bill is 40 yrs old. His made 72,000 last year had 60,000. in annual expenses,

    Absolute performance standard, Absolute Performance Standard is a method of...

    Absolute Performance Standard is a method of measuring an organization's development and how effective and efficient it is at operating its business. The absolute performance stand

    Business, Ken started college at the age of 18 with $63,450 already saved, ...

    Ken started college at the age of 18 with $63,450 already saved, because 18 years ago his saving account 7.25 per year.

    Financial maket, knowledge of financial market is power discuss

    knowledge of financial market is power discuss

    Conversion price, It is the exercise price at which the investor or...

    It is the exercise price at which the investor or the bondholder exchanges the bond for shares.

    Organization and management pattern of uti, Organization and Management Pat...

    Organization and Management Pattern of UTI UTI has a full-time Chairman with an Executive Trustee reporting to him. The Executive Trustee looks after the Corporate Office, Zona

    Speculating on future exchange rate movements, There is some discussion on ...

    There is some discussion on whether Multinational Corporations (MNC's) enhance risk when borrowing foreign currencies. Those in favor of borrowing state that lower costs of financi

    Rating symbols, Rating Symbol Capacity ...

    Rating Symbol Capacity for Timely Repayment Rating Symbol Capacity for Timely Repay

    Write Your Message!

    Captcha
    Free Assignment Quote

    Assured A++ Grade

    Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

    All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd