Bonds

Bond is a security issued by a corporates, financial institution or government which offers regular or fixed payment of interest in return on the amount borrowed money for a certain period of time.
In a bond investor lends money to the issuer for a fixed period of time . There are two options of interest in bonds in one option Interest is paid to the bond holder at regular intervals, the principal amount is repaid at a later date, known as the maturity date , In other option recurring interest is paid with principal on maturity these bond can also be called bonds with cumulative interest.

Differentiation :

Bonds and stocks both are securities, the basic difference between the two is that bond holders are lenders, while stockholders are the owners of the organization. Another difference is that bonds usually have a defined maturity after which the bond is redeemed, whereas stocks may be outstanding indefinitely

Types of Bonds
  • Zero coupon bonds -
    Zero coupon bonds do not pay any interest. They are issued at a substantial discount to par value. The bond holder receives the full principal amount on the redemption date.
  • G-Sec Bonds -
    Government Securities is a bond where government issue bond and borrow money through it . It is the safest form of bond as it is issued by government . Government issues bonds to raise money for funding infrastructure development, support subsidies or several other initiatives.
  • Corporate Bond -
    Corporate Bond are issued by private and public companies for investors. They borrows money from investors and promise to pay interest at regular intervals.
  • Inflation Linked Bond -
    In Inflation linked bonds; principal and the interest payments are indexed to inflation. The interest rate is usually lower than that of fixed rate bonds with a comparable maturity.
  • Convertible Bond -
    The holder of a convertible bond has the choice to convert the bond into equity of the issuing firm on pre-specified terms. This results in an automatic redemption of the bond prior to maturity date.
  • Private Limited Company

    A private limited company is the most reputed form of carrying business in India. The minimum number of members in private limited company is 2 and maximum number of members is restricted to 50. A private limited company is considered as a separate legal entity. A private limited company name ends with ‘Private Limited’.

  • Public Limited Company

    The Company is a Public Limited Company which is incorporated under companies Act and has minimum paid-up capital of Rs. 5 lakhs.In a public limited company, minimum number of shareholders is 7 and minimum number of director is 3.

  • Section25 Company

    This section empowers the Central Government to grant a license directing that such an association may be registered as a company with limited liability, without the addition of the Words `Limited’ or `Private Limited’ to its name.

  • Limited Liability Partnership

    A Limited Liability Partnership (LLP) is a one form of body corporate which was introduced in India by the Limited Liability Partnership Act, 2008.