ACCAF9考试：Bonds
1. Bond-a written acknowledgement of a debt, usually given under the company's seal, containing provisions for payment of interest and repayment of principal. The debt may be secured on some or all of the company's assets.
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Type
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Secured Bonds
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Unsecured Bonds
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Security
and voting rights |
● Can be secured by one or more specific asset （e.g. over property）, this is known as a fixed charge.
● Secured by a class of assets （e.g. net current assets or working capital）, this is known as a floating charge. ● On default, the assets used as security are sold and the proceeds applied towards repaying the debt. ● No voting rights. |
● No security.
● Holders have the same rights as ordinary creditors. ● No voting rights. |
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Income
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● A fixed annual amount （interest）, usually expressed as a percentage of nominal value.
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● A fixed annual amount （interest）, usually expressed as a percentage of nominal value.
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In the UK, bonds are usually issued with a face value of ？100.
They can be traded on the bond market and reach a market price.
Hence, if a bond is “selling at a premium of 15%”, this means that a bond with a face value of ？100 is currently selling for ?115.
This indicates that the rate of interest on this bond is attractive when compared with current market rates, creating demand for the bond and a rise in price.*
In the US the face value of a bond is usually $1，000.
2. Deep Discount Bonds
Deep discount bonds-bonds issued at a large discount to nominal value （i.e. issued well below face value） and redeemable at par on maturity.*
With deep discount bonds, investors receive a large capital gain on redemption, but are paid a low rate of interest, if any, during the term of the loan.
These bonds offer a cash flow advantage to the borrower. This is especially useful for financing projects which produce weak cash flows in early years.
3.Zero-Coupon Bonds
Zero-coupon bonds-bonds issued at a discount to face value and which pay zero annual interest.
Zero-coupon bonds have the following advantages：
The issuing company pays no interest and the only cash payout is at the bonds' maturity.
Investors gain from the difference between issue and redemption price.
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