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Bonds are debt instruments also called fixed-income securities, which represent a loan obligation issued by the government, or an organization (company), or an individual in order to raise money.
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The investor lends funds to the bond issuer in exchange for regular interest payments (known as coupon) over a specified period (known as tenor).
Tenor typically range from 2-30 years, depending on the bond issue.
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The investor receives regular interest income paid semi-annually (or quarterly, as is the case of the Federal Government of Nigeria Savings Bond, FGNSB launched in 2017).
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At the end of the tenor or maturity period, the borrower (bond issuer) pays back the money loaned in full to the investor (bondholder).
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Example
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A 2/3 year maiden edition of the FGNSB was issued for a minimum subscription of N5,000, and subsequently in multiples of N1,000 at a 13.01% annual coupon rate paid quarterly.
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(Note that these rates can fluctuate. Also, different tenors can have their respective rates.)
.
What this means is that if you have, say, N50,000 in a savings account that you will not need urgently. Instead of tying down the money in your bank savings account, you could subscribe to the bond issue for 2 or 3 years, and then get N1,626.25 credited into your account quarterly (every three months) till the maturity date.
.
There are different types of bonds you may hear about in the markets. They including:
(a.) Corporate bonds—issued by companies
(b.) Municipal bonds—issued by a State Government
(c.) Treasury bonds—varieties of bonds issued by the FGN. E.g. …the Green bond, euro bond, Diaspora bond, and Savings bond.
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You can always sell your bond holdings on the Exchange if you happen to need the money earlier than you planned for.
.
You can, for example, buy long-term bonds, hold
them and collect interest payments for several years, and then sell them when their market value increases, or whenever the need arises.
.
©ulled from: Cracking the Stock Market Code...by Amah Lambert
Bonds are debt instruments also called fixed-income securities, which represent a loan obligation issued by the government, or an organization (company), or an individual in order to raise money.
.
The investor lends funds to the bond issuer in exchange for regular interest payments (known as coupon) over a specified period (known as tenor).
Tenor typically range from 2-30 years, depending on the bond issue.
.
The investor receives regular interest income paid semi-annually (or quarterly, as is the case of the Federal Government of Nigeria Savings Bond, FGNSB launched in 2017).
.
At the end of the tenor or maturity period, the borrower (bond issuer) pays back the money loaned in full to the investor (bondholder).
.
Example
........................................................................................
A 2/3 year maiden edition of the FGNSB was issued for a minimum subscription of N5,000, and subsequently in multiples of N1,000 at a 13.01% annual coupon rate paid quarterly.
.........................................................................................
(Note that these rates can fluctuate. Also, different tenors can have their respective rates.)
.
What this means is that if you have, say, N50,000 in a savings account that you will not need urgently. Instead of tying down the money in your bank savings account, you could subscribe to the bond issue for 2 or 3 years, and then get N1,626.25 credited into your account quarterly (every three months) till the maturity date.
.
There are different types of bonds you may hear about in the markets. They including:
(a.) Corporate bonds—issued by companies
(b.) Municipal bonds—issued by a State Government
(c.) Treasury bonds—varieties of bonds issued by the FGN. E.g. …the Green bond, euro bond, Diaspora bond, and Savings bond.
.
You can always sell your bond holdings on the Exchange if you happen to need the money earlier than you planned for.
.
You can, for example, buy long-term bonds, hold
them and collect interest payments for several years, and then sell them when their market value increases, or whenever the need arises.
.
©ulled from: Cracking the Stock Market Code...by Amah Lambert