Frequently Asked Questions

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Why should one invest in fixed income securities?

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While many investments provide some form of income…d in addition to the interest they have received.

What are the advantages of investing in bonds?

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Stability of principal: One advantage of investing…ion and thus assist in portfolio risk mitigation.

What is a bond?

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A bond is a fixed income instrument that represent…ders along with the principal amount at maturity.

What is a maturity date?

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A bond pays interest periodically and repays the principal at a stated time, known as maturity.

What is a coupon rate?

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Coupon rate is the periodic rate of interest paid …ter what happens to the bond price in the market.

What is the difference between yield to maturity (YTM) and current yield (CY)?

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Yield to maturity (YTM) is the total return antici…coupon) divided by the current price of the bond.

What is the taxation aspect of bonds?

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The interest on bonds, except tax-free bonds, is t…lifying period is 12 months instead of 36 months.

What is the difference between coupon rate and yield?

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A coupon is the fixed interest rate paid to the bo…time, expressed as a percentage of interest rate.

What is a call/put option?

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A bond option is a contract that gives an investor…fit on favorable, short-term movements in prices.

What do perpetual bonds mean?

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A perpetual bond is a bond with no fixed maturity …herefore calculated up to the earliest call date.

What type of fixed income instruments are available for investment?

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Who are the issuers in the debt market?

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Who regulates the bond market?

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The bond market is regulated by RBI & SEBI.

Where are these bonds traded?

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Most of the bonds are traded over-the-counter betw… the bonds are traded publicly through exchanges.

What is the face value of the bond?

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Face value is the amount the investor will get bac…om issue to issue and is dependent on the issuer.

Are all bonds secured?

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A bond can be secured or unsecured. Secured bond p…This asset is also called collateral on the loan.

Are these bonds guaranteed?

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Not all bonds carry a specific guarantee. However,…arty, or the government/government-owned company.

How the bonds are issued?

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The bond issuance process varies based on bond typ…nds are issued through the RBI auction mechanism.

Are these bonds listed?

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Most bonds are listed on stock exchanges (BSE/NSE)…isting unlike bonds issued by corporate entities.

What is the day count convention?

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Day count convention is to determine the number of… There are 4 different conventions-

What is accrued interest and holding period interest?

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Accrued interest is the interest on a bond that ha…held is called the holding period interest (HPI).

How will I receive interest on bonds?

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In the case of corporate and government bonds, int…directly by the issuer on interest payment dates.

How is the bond price determined?

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The bond price is determined by discounting the ex…o-maturity, credit ratings, and economic factors.

Are these bonds rated?

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A bond rating is a way to measure the creditworthi…too typically real estate structured obligations.

What is the minimum investment amount?

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Minimum investment amount ranges between Rs. 10,000 to Rs. 10,00,000 depending on product type.

Can I use the existing Demat account for the bond transaction as well?

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You can use your existing Demat account for investing in bonds.

Are rates shown on the system fixed?

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Rates shown on the system are indicative rates and… is subject to change based on market conditions.