An introduction to the bond markets

245 Pages·2006·1.24 MB·english

by  Patrick J. Brown

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An Introduction to the Bond Markets
Patrick J. Brown
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An Introduction to the Bond Markets
i
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ForothertitlesintheWileyFinanceSeries
pleaseseewww.wiley.com/finance
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An Introduction to the Bond Markets
Patrick J. Brown
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LibraryofCongressCataloging-in-PublicationData
Brown,PatrickJ.
Anintroductiontothebondmarkets/PatrickJ.Brown.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN-13:978-0-470-01583-4(cloth:alk.paper)
ISBN-10:0-470-01583-7(cloth:alk.paper)
1.Bonds. 2.Bondmarket. I.Title.
HG4651.B685 2006
332.63(cid:3)23—dc22
2006004502
BritishLibraryCataloguinginPublicationData
AcataloguerecordforthisbookisavailablefromtheBritishLibrary
ISBN13 978-0-470-01583-4(HB)
ISBN10 0-470-01583-7(HB)
Typesetin10/12ptTimesbyTechBooks,NewDelhi,India
PrintedandboundinGreatBritainbyAntonyRoweLtd,Chippenham,Wiltshire
Thisbookisprintedonacid-freepaperresponsiblymanufacturedfromsustainableforestry
inwhichatleasttwotreesareplantedforeachoneusedforpaperproduction.
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To my wife, Katy
...so I decided to go East and learn the bond business. Everybody I knew was in the
bondbusiness,soIsupposeditcouldsupportonemoresingleman.
TheGreatGatsby–F.ScottFitzgerald
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Contents
Preface xi
Disclaimer xv
Introduction xvii
1 WhatisaBondandWhoIssuesThem? 1
1.1 Descriptionofabond 2
1.1.1 Theissuer 2
1.1.2 Sizeandcurrency 2
1.1.3 Type 2
1.1.4 Couponpaymentsandfrequency 2
1.1.5 Redemptionamountandmaturitydates 3
1.1.6 Embeddedoptions 4
1.1.7 Guarantee 5
1.1.8 Wherequotedandtraded 6
1.2 Thedifferencebetweencorporatebondsandequities 7
2 TypesofBondsandOtherInstruments 9
2.1 Fixed-ratebonds 9
2.1.1 Straightcouponbonds 9
2.1.2 Zero-couponbonds 10
2.1.3 Undatedorirredeemablebonds 11
2.1.4 Strippablebondsandstrips 11
2.1.5 Bondswithsinkingfunds 13
2.1.6 Step-uporgraduated-ratebonds 14
2.1.7 Annuities 15
2.2 Floating-ratenotes 16
2.2.1 Undatedorperpetualfloating-ratenotes 19
2.3 Index-linkedbonds 19
2.4 Hybridbonds 22
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