Welcome to My Presentation Presented by Md. Fayez Ahmed ID:16134.

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Presentation transcript:

Welcome to My Presentation Presented by Md. Fayez Ahmed ID:16134

Debt A loan to a firm or govt. or individual. Types of debt: tow types 1. Short term: loan paid within one year. 2. Long term: Loan paid within a specific date which is more than one year. Bond: A long term debt instrument is bond Key characteristics of bond: 1. Par value: the amount the firm repays at the end of certain year. 2. Coupon rate: the rate at which the company pay interest at equal interval. 3. Maturity date: at which the company repay the stated amount

Classification of bonds : basically four types of bonds. Treasury bond: Issued by government. Government will repay the money. Less credit risk Price falls when inters rises. Corporate bonds: bonds issued by firms. Higher credit risk Higher interest the bond holder require

Municipal Bonds: issued by local government Less credit risk One major advantage: interest earned is exempt from tax. Foreign Bonds: issued by foreign corporations. Higher credit risk: One additional risk: if currency of the investor's home country is dominated by foreign countries. Example: if price of dollar increase or decreases.

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