Bonds and Treasuries

A fund in which moneys are placed in reserve to be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements. The debt service reserve fund may be entirely funded with bond proceeds at the time of issuance, may be funded over time through the accumulation of pledged revenues, or may be funded only upon the occurrence of a specified event (e.g., upon failure to comply with a covenant in the bond contract). In addition, issuers may sometimes authorize the provision of a surety bond or letter of credit to satisfy the debt service reserve fund requirement in lieu of cash. If the debt service reserve fund is used in whole or part to pay debt service, the issuer usually is required to replenish the fund from the first available revenues.

Go to www.treasurydirect.gov and click on the growth calculator, key in your serial number of your bond and the date of issue. It will bring up the next accrual, final maturity, interest accrued thus far, interest rate and value of bond as of the current date. Hope this helps!

When you buy a savings bond, you get a coupon payment periodically during the lifetime of the bond (typically 3%-4% of the face value), and when the bond matures, you get the original amount of money you paid back as well as the final coupon payment.

Just guessing, it il likely highly collectable and may be worth more that way than any other.

commercial bonds are jumbo CD's starting at $100,000 and are offerred by large corporations and sometimes banks, who want to borrow a large amount of money for a short period of time. If you happen to have this kind of cash corporations are willing to pay you a higher than normal rate of return. They were more popular in the 1970's and 1980's before mutual fund money markets were available on the retail level. Now anyone can get a higher interest rate by pooling only $1,000 together with other buyer to get a higher rate for liquid money. If you look at the prospectus of a mutual fund money market you will see it is made up of large denominations of short term (15 days to 3 months) loans by some big name companies and banks.

From what I heard is that the government has put a stop to the issuing of them but that there may be some in the hands of people that may be willing to sell them. If that is so & if they pay interest they will probably sell them at full value therefore you may as well stuff your mattress with cash.

Patriot Bonds are Series EE savings bonds, which are specially inscribed with the words "Patriot Bond." The Patriot Bond series will begin December 11, 2001. Bonds increase in value every month, and interest is compounded semiannually. You can cash your bond after six months. Bonds cashed before they are five years old are subject to a 3-month interest penalty.

Please see Chapter 10 of Valuing Fixed Income Investments & Derivative Securities by Steven L Allen & Arnold D Kleinstein, New York Institute of Finance ISBN 0-13-931775-9 (ed 1991).

The executor of the estate should be able to apply to cash the savings bond in and provide the money to you.

Coupon rate

what are the advantage of bond financing?

1. Cover customer's daily foreign exchange transaction requirement. 2. Manage the Bank's liquid assets to ensure that sufficient liquid

assets are held consistent with of statutory requirements and that the

best return on these assets are realised. 3. Manage the Bank's other surplus assets to ensure that the Bank remains in

a liquid position and obtains the best return on these assets. 4. To manage the Bank's funding requirements as directed by management. 5. To maintain the Bank's Nostro Account in the books of foreign correspondents. 6. Daily up-date of foreign exchange rates.

Stocks (aka Equities): Stocks represent partial ownership of a corporation. If the corporation does well, its value increases, and you share in the appreciation. However, if the corporation goes bankrupt, you can lose your entire initial investment.

Bonds (aka Notes): Bonds represent a loan you make to a corporation or government. For example, you can buy a US Treasury bond for $100, and get a guaranteed interest rate for 5-years, and can expect to get your $100 back at the end of that 5-years plus interest. Your risk is repayment of the principal (amount invested). Because loaning $100 to the U.S. government is much less risky than loaning $100 to the Brazilian government, U.S. government bonds pay a much lower rate of interest ("coupon") for borrowing your money. Stocks and Bonds .... How do they differ Stocks are EQUITY. They represent shares of ownership in a Corporation. A Stockholder is actually one of many owners of a Publicly Owned Corporation. If a Corporation dissolves for any reason owners of Common Stock (the main type of stock issued) receive the value of the sold assets of the Corporation AFTER everyone else is paid, including the IRS, Employees, Bonds, Accounts Payable, etc.

Bonds are DEBT. They are sold by the Corporation in order to raise money for various purposes for use by the company. Bonds offer an interest rate to the Bondholder for the period of time that the Bondholder owns the bonds.

Since bonds do not represent ownership, the bondholder could lose their investment if the Corporation dissolves, but are paid BEFORE owners of stock.

When you buy either bonds or stock, you pay money now with the possibility of getting more money later. But a bond represents a debt--the company that issued the bond owes you money to be paid when the bond is redeemed. A stock represents ownership. As a stockholder, you become a part owner of the company.

Stocks, compared to bonds, have which of the following characteristics?

A. No guarantees

In addition to stocks and bonds, you may hear about other investments, like commodities (like oil or precious metals), foreign exchange, credit, inflation, and real estate.

In your stock portfolio, you will already have exposure to these asset classes. For example, your stocks should include energy companies (commodities exposure), foreign companies (foreign exchange exposure),and, by virtue of owning stocks themselves, some credit exposure.

== New Answer====

As an investment consultant in one of the most successful investment companies in the US, this is a question that I deal with on a daily basis. It is certainly important to consider other investments in addition to stocks and bonds, however that does not necesarily mean that you need to buy them individualy to accomplish that. Simply investing in a diversified mutual fund could allow you to have exposure to stocks, bonds, CD's, REITs, commodities, foreign investments, etc., without the risk and volitility of investing dirctly into these positions directly. This is particularly true with comodities, futures, options, and foreign equities.

This is the "safe" part of your porftolio, so you want to invest in government or highly rated corporations. (Highly-rated corporates are large, established multi-nationals like General Electric or Citibank, who are not likely to default on their bond payments.) The U.S. is regarded as the safest place to invest. This part of your portfolio might include U.S. government bonds and the debt (bonds) of U.S.-based corporations. How do you pick which bonds to buy? Thankfully, someone already did that research. "The Lehman Brothers Aggregate Index ... represents securities that are U.S. domestic, taxable, and dollar denominated. The Index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities." Lehman Brothers' bond market indices are widely used as benchmarks and guidelines for investors.

Bonds trade at a premium or discount based on the interest rate demanded by the markets for that specific maturity, credit quality, and details vs. the rate demanded at the time of issue. - Example: Trading at a Discount - For example, the 4.5% US Government bond maturity 02/15/16 is currently trading at a discount. At issuance, you could buy this bond for $100.00 and receive $4.50 every year in interest. However, interest rates are higher today than they were when the bond was issued (currently 4.85% for this maturity/credit quality). Therefore, to receive 4.85% in interest, you must pay less than 100 for the bond you would have paid at issuance. The reverse is true for bonds trading at a premium. If the interest rate had fallen to 4.00%, you would be willing to pay more than 100.00 for the bond.

Bonds have less risk, but stocks potentially provide greater returns.

Looking at this, I should add to it. There are two ways a bond is less risky than a stock.

First is the nature of a bond. It's a loan, and there are two kinds, coupon and zero-coupon. When a company sells a "coupon" bond, they guarantee that on specific dates they will pay interest, and on a specific date in the future they will return the principal. The bond has a number of coupons attached to it, and each is dated. When the date on the coupon arrives, you turn it in and receive your interest payment. The main part of the bond is called the corpus, and it's also dated. (Having said that, there is a market for "stripped" bonds; someone will buy a bond, remove the coupons, and sell the coupons and the corpus separately to people who don't want to invest long-term.) A zero-coupon bond is sold at a discount from its face value, and you hold it till it matures then receive the face value at that time. The bottom line with bonds is, they are obligated to pay you exactly what they say they're going to pay you exactly when they say they will. The downside is, they won't pay you more than that and stocks potentially will pay you far more than that. Ask the investors who bought Apple in 1984 when it was $25 about that. (Also talk to the investors who bought it at $700...right now, it's around $550.)

The other is if the company goes under. Should a corporation have to be liquidated, they are required to make all the bondholders whole before the stockholders receive anything.

When bonds are downgraded, new bonds will have to be issued at a higher interest rate. That means that the amount of money they have to pay to service the debt will be a greater fraction of the amount borrowed. Since they presumably have not seen any dramatic rise in cash flow available to service the debt, they won't be able to borrow as much.

If it goes over that thin line from "investment grade" to junk, it could be worse because banks are less likely to loan to them at all.

short notes on : 1. cost of capital of a bond. 2. cost of capital of an equity share. 3. discounted pay backperiod. 4. modified internal rate of return. 5. mutual funds in india.

If the 2 5 years are exactly the same with the exception of having coupons (same lender, same claims, same everything) then yes you should be able to. The trick is finding the right yield curve and discounting everything back to the present value. The coupons can be treated as mini zero-coupon bonds in their own right.