Debt Securities - These securities are in the form of debt or borrowings which have to be repaid by the issuer to the holder of the securities. The issuers of debt securities have to pay interest in the form of coupons at a rate of interest.  Debt securities are a means of diversification and provide a predictable income stream to the holders. You mention "coupons" in you debt instrument discussion. Can you tell us more about these coupons? How do they work, where do we find them? Are they registered?

Q: Why might a company choose to raise money through bonds, rather than take out a note payable or…

A: Bonds are the long-term liability of the company where the company raises the money in lieu of…

Q: A.Discuss three factors that affect net interest income.B.What are the objectives of the Basel III…

A: Net interest income is the difference between the revenue that is generated from a bank's assets and…

Q: What are your thoughts about buying short term bonds vs. long term bonds in this economic situation?

A: Long-term bonds are more vulnerable to shifts in interest rates. The explanation is the existence of…

Q: Why would the company redeem the bonds prior to the maturity date if they were going to recognize a…

A: A bond appears to be a debt owing to a firm or government that pays holders a predetermined interest…

Q: Debt securities are instruments that provide the holder a promise to pay the instrument's face value…

A: Debt securities do function as described:Promise to repay face value: When you buy a debt security…

Q: Which of the following is not a main core function of the financial system? a. Provide a payments…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: nterest rate swaps and gap analysis to manage interest rate risk.

A: There are two methods in which a bank can manage its interest rate risk  (a) by matching the…

Q: What ratios are likely to be of greatest interest to the banker or trade creditor? To the…

A: The objective of the question is to identify the financial ratios that are of greatest interest to a…

Q: Credit scoring is a process used to   Multiple Choice   determine what interest rate to charge a…

A: Credit score : it is a number between 300 - 850 which depicts consumers creditworthiness.

Q: The market interest rate.... Select the word list below: - is the contractual interest rate used to…

A: The market interest rate refers to the rate of return that is prevalent in general for all…

Q: Should financial institutions invest in junk bonds?

A: The answer for the theory question on junk bonds is discussed hereunder.  Dear student,  As you have…

Q: Explain what credit default swap is and how CDS's can be used by financial institutions such as…

A: Swap is defined as the derivative contract by which the parties (two) used to exchange the cash…

Q: If you are an investor will you choose to investment in bonds? Why?

A: Bond is a debt security.

Q: When selling bonds at a premium, the premium received effectively a.does not affect the cost of…

A: Premium means selling of bond at price higher than face value.

Q: Bond ratings measure a company's: Exchange rate risk.   Equity risk.   Interest rate risk.…

A: A bond rating is an assessment of the creditworthiness of a bond issuer, such as a corporation or…

Q: Which statement is FALSE regarding bonds?Select one:The pay back their face value within their…

A: Bonds, when issued, represent debt obligations of the firm, not equity. Therefore, their issuance…

Q: Explain callable and putable bonds in detail. Why are they important to issuing firms or investors?

A: Callable bond: The bond having the privilege to redeem by the issuer before maturity.   Puttable…

Q: Some market participants say that convertible bonds are “debt when you want them to be equity, and…

A: A bond is a kind of debt instrument that a public company or a government of country issues in the…

Swaps

A swap is a derivative contract in which two parties are agreed to exchange their cash flows from two different financial instruments for a defined period. In swap contracts, cash flows from one financial instrument are fixed and cash flow from other financial instruments is variable based on the interest rate, exchange rate, and commodity price. Swap contracts are transacted in an over-the-counter system. Swap contracts are utilized to hedge risk and mitigate loss.