Indexed bonds, Financial Management

In indexed bonds, the principal and coupon payments are linked to the market index like inflation and price index. Index bonds are attractive to investors as they are safer than the conventional bonds in terms of real interest rate risk and inflation expectation risk. Indexed bonds, apart from providing safety to investors, also provide a steady interest income from investment while keeping the principal intact. Because both coupon and principal payments of an indexed bond are adjusted for inflation, an investor can count on the steady purchasing power provided by the coupon interest payment during the life of the bond. Further, when an indexed bond matures, its principal has the same purchasing power as when it was invested. 

Posted Date: 9/8/2012 4:33:34 AM | Location : United States







Related Discussions:- Indexed bonds, Assignment Help, Ask Question on Indexed bonds, Get Answer, Expert's Help, Indexed bonds Discussions

Write discussion on Indexed bonds
Your posts are moderated
Related Questions
Illustration  Let us assume that Vishal Mehta & Co., (from Illustration 1) is using the following discounting rates in place of one rate:

what are the limitations of using projected data

Prices of Calls and Puts Options the shares of Marks & Spencer a) Explain carefully why the November calls are trading at higher prices than the September calls. b) Draw

Investors require an 11% return on a preferred stock that pays a $2.30 annual dividend.  What is the price

State about the equity owners Flip side of the coin is that the equity owners are also owners of all the profits which remain after all the debt holders are paid their interes

Lenders Lenders are concerned to receive payment of interest and ultimate re-payment of capital. They don't share in the upside of very successful organisational strategies as

Fundamentals of Structured Product Engineering 1. (a) Let r m denote the m month swap rate (or Libor rate). Subsequently the 3 × n month forward rate f (3 ×n )

Suppose you are planning to make regular contributions in equal payments to an investment fund for your retirement. Which formula would you use to figure out how much your investme

Bonds can also be classified into convertible and non-convertible depending upon whether they carry a conversion feature or not. Convertible bonds are the ones which ca

Starbucks future cash flows