43 43 characteristicsofbondsf

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Unformatted text preview: with many years left until maturity may still be new enough to be under call protection. And your bonds nearer maturity won't be called because the costs of calling the issue wouldn't be worth it for the company. While only some bonds are at risk of being called, your overall portfolio remains stable. Finally, to determine whether a callable bond actually offers you a higher yield, always compare it to the 40 40 yields of similar bonds that not callable. Characteristics of Bond Bond Indenture­A legal and binding contract between a bond issuer and the bondholders. The indenture contains all the terms and conditions applicable to the bond issue. The indenture specifies all the important features of a bond, such as its maturity date, timing of interest payments, method of interest calculation, callable/convertible features if applicable and so on. A trustee usually a bank is assigned to represent the bond holders and to guarantee that terms of the indenture are carried out. 41 41 Character...
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This note was uploaded on 02/11/2014 for the course FIN 102 taught by Professor Han during the Fall '11 term at Kazakhstan Institute of Management, Economics and Strategic Research.

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