What are the investment characteristics of bonds?

Hello, bonds are issued to investors when financial institutions, industrial and commercial enterprises, etc. directly borrow from the society to raise funds, promising to pay interest at a certain interest rate and repay the principal according to the agreed conditions. The essence of a bond is a certificate of debt. The bond issuer is the debtor and the investor (bondholder) is the creditor.

A bond is a valuable one**. Since the interest rate on a bond is usually determined in advance, a bond is a type of fixed interest rate (fixed rate).

Bonds have the following characteristics:

1) Repayment. Repayability means that the bond has a specified repayment period, and the debtor must pay the creditor interest and repay the principal on time.

2) Liquidity. Liquidity means that bondholders can flexibly transfer bonds according to their needs and market conditions in order to recover the principal and realize investment income in advance.

3) Security. Security means that the income of bondholders is relatively stable, does not change with the change of the issuer's operating income, and the principal can be recovered on time.

4) Profitability. Profitability refers to the fact that bonds can bring investors a certain amount of income, that is, the return on bond investment.

1) High securityIn the field of bond investment, many investors believe that investing in bonds is very safe. In fact, investing in bonds has the characteristics of safety, and its security is very high. (2) The yield is higher than that of bank deposits in China, and the interest rate of bonds is higher than the interest rate of bank deposits.

Investing in bonds, investors can obtain a stable interest income that is higher than that of bank deposits; On the other hand, you can take advantage of the movement of bonds** to buy and sell bonds and earn the spread. (3) Strong liquidity: Listed bonds have good liquidity. Bondholders can sell at any time when they are in dire need of funds, and the liquidity of bonds will continue to strengthen as financial markets open up further.

From an investment point of view, bonds are characterized by the following aspects:

1. Repayment, repayability means that the bond has a specified repayment period, and the debtor must pay interest and repay the principal to the creditor on time;

2. Liquidity, liquidity means that bondholders can flexibly transfer bonds according to their needs and the actual situation of the market, so as to recover the principal in advance and realize investment returns.

3. Security, security refers to the relatively stable income of bondholders, which does not change with the change of the issuer's operating income, and can recover the principal on schedule;

4. Profitability refers to the fact that bonds can bring certain income to investors, that is, bond investment.

remuneration. Bonds are issued by debtors such as enterprises and banks in accordance with legal procedures in order to raise funds and promise creditors to repay principal and interest on a specified date. Bond is a kind of financial contract, which is issued to investors when financial institutions, industrial and commercial enterprises, etc. directly borrow funds from the society, and at the same time promise to pay interest at a certain interest rate and repay the principal according to the agreed conditions.

The essence of a bond is a certificate of debt, which has the force of law. The bond issuer is the debtor, and the investor (bond purchaser) is the creditor.

Mortgage bonds are bonds secured by corporate property, which can be divided into general mortgage bonds, real estate mortgage bonds, chattel mortgage bonds and **trust mortgage bonds according to different collaterals. The use of immovable property such as houses as collateral is called a real estate mortgage bond; Movable property such as marketable commodities are used as supplies, which are called chattel-backed bonds; If the valuable bonds are used as collateral, they are called trust bonds. In the event of a default by the bond issuer, the trustee may sell the collateral to ensure the creditor's preferential claim.

A credit bond is a bond issued entirely on credit without the security of any company's property. **Bond.

This category of bonds is included. This type of bond has solid reliability due to the absolute creditworthiness of its issuer.

Bonds as an investment tool are characterized by security, higher returns than bank deposits, and strong liquidity.

High security, because the bond is issued when it is agreed that the principal and interest can be paid after maturity, so its income is stable and the security is high. Especially for treasury bonds, the payment of principal and interest is guaranteed by **, there is almost no risk, it is an investment method with high security, and the income is higher than that of bank deposits.

Further Resources: Factors of Bond Investment Returns:

1) The coupon rate of the bond.

The higher the coupon rate of the bond, the higher the interest income of the bond, and the higher the yield of the bond. The coupon rate of a bond depends on factors such as the market interest rate at the time of bond issuance, the maturity of the bond, the credit level of the issuer, and the liquidity level of the bond.

The higher the market interest rate at the time of issuance, the higher the coupon rate; The longer the maturity of the bond, the higher the coupon rate; The higher the issuer's credit level, the lower the coupon rate; The more liquid a bond is, the lower the coupon rate.

2) Market Interest Rates and Bonds**.

From the formula for calculating the bond yield (bond yield = (principal and interest at maturity and - issuance**) (issuance** repayment period) 100%), it can be seen that the change of market interest rate is inversely related to the change of bond**, that is, when the market interest rate increases, the bond** falls, and when the market interest rate decreases, the bond** rises.

Changes in market interest rates cause changes in bonds**, which in turn create a difference in the price of the bonds. Higher market interest rates, positive bid-ask spreads for bonds, and increased investment income on bonds; Market interest rates are lower, bond bid-ask spreads are negative, and investment returns on bonds are reduced.

and 3) the cost of investing in bonds.

The cost of bond investment is roughly divided into three parts: purchase cost, transaction cost and tax cost. The purchase cost is the amount paid by the investor** for the bond (the product of the number of bonds purchased and the number of bonds**, i.e., the principal); Transaction costs include broker commissions, closing fees, and closing fees.

Timing of the allocation of bonds**.

Since the performance of the bond market is mainly related to market interest rates, we can determine the timing of bond investment based on the performance of market interest rates.

Referring to the yield to maturity of the 10-year treasury bond, the annual yield of CSI all-bond is higher in the year when the yield of the treasury bond is unilateral**; In the unilateral ** year, the annual yield of CSI total bonds is low or negative, and there is an obvious mean reversion characteristic.

Therefore, when the yield of treasury bonds is relatively high and there is a high probability of going down, you can allocate bonds, and when the yield of treasury bonds is relatively low and there is a high probability of going up, you can consider selling.

1) Repayment.

Bonds have a specified repayment period, and the debtor must pay interest and repay the principal to the creditor on time.

2) Liquidity.

Bondholders have the flexibility to transfer bonds according to their needs and market conditions in order to recover the principal and realize investment income in advance.

3) Security.

The income of bondholders is relatively stable, does not change with the change of the issuer's operating income, and can recover the principal on schedule.

4) Profitability.

Bonds can bring investors interest income, capital gains and losses, and reinvestment income.

In October 2007, the self-study exam "Financial Management" real question short-answer question 1.

Briefly describe the characteristics of bond investment.

Proofreading Answer:Characteristics of debt investment:

1) From the perspective of investment time, whether it is a long-term bond investment or a short-term bond investment, there is a maturity date, and the bond must be repaid on time;

2) From the perspective of investment types, due to the different identities of issuers, they are divided into national bond investment, financial bond investment, corporate bond investment, etc.;

3) From the perspective of investment income, bond investment income has strong stability, which is usually predetermined in advance, which is especially reflected in the bonds invested in the primary market;

4) From the perspective of investment risk, bonds should ensure repayment of principal and interest, stable returns, and small investment risks;

5) From the perspective of investment rights, among the various investment methods, bond investors have the least rights, and have no right to participate in the operation and management of the invested enterprise, and only have the right to obtain interest and recover the principal at maturity as agreed. See page 322 of the textbook.