Bonds
What Is a Corporate Bond?
Key Takeaways:
A corporate bond is debt issued by a company in order for it to raise capital. An investor who buys a corporate bond is effectively lending money to the company in return for a series of interest payments, but these bonds may also actively trade on the secondary market. Corporate bonds are typically seen as somewhat riskier than government bonds, so they usually have higher interest rates to compensate for this additional risk. The highest quality (and safest, lower yielding) bonds are commonly referred to as “AAA” bonds
Types of Bonds:
As per the Reserve Bank of India SGBs are government securities denominated in grams of gold. These are the substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by the Reserve Bank of India on behalf of the Government of India. The issue price and redemption price depends on the price of gold as per the IBJA Rate. Here the investor also gets a return in form of Interest Income for every Sovereign Gold Bond investment which is determined at the time of issue. Interest is calculated on the face value amount which is 2.5% per annum. Here the investor receives interest every 6 months till maturity or redemption date. These bonds have a tenure of 8 years and can be redeemed after 5th year.
