The bond term uses phrases such as nominal, broadcast and broadcast to deliver important data about them. Each phrase can use different nuances of contextual meaning. Many terms refer to operations with coupons, expiration and call functions, terms that describe mathematical functions to calculate the price and yield of a bond. The nominal value, issue and dissemination are more commonly used to describe the size, price and relative value of a bond issue.
Nominal amount of bonds
All bonds can be described in relation to their maturity or face value. The bonds are traded at points, 100 the expiration amount. They can be purchased at a discount on their nominal value, therefore, the bond yield is a function of the same coupon or the interest payment date, and the difference between the discount and the nominal amount. Premium bonds refer to bonds with interest rate paid or coupon rate above current interest rates. The bond price in this way is above the nominal value, and the loss of the premium in the period is comprised of additional coupon income.
Value of nominal value
When the goods sold by the bonds come to the market, it usually occurs in a union or in a group of insurers, agreeing to buy the whole issue at certain dates, rates and prices. This is called a new sale of the bond issue. After the sale of bonds, individual securities are trading in a free market, a marketplace with operating policies but does not imply a particular change. The market is known as the secondary market. Bonds are often traded on the face value, which means that the purchase of bonds refers to the amount of bond maturity, not the current market value.
The price of the issue
The bond issue refers to whether a bond issue is being sold on a new issue or in the secondary market. The issue price refers to the current bond price at points, not the cost of the expiration. New issues of bonds during a sale have no fixed date for buyers. As a result, their performance is known, but not the price of the issue. Bond trading at an indeterminate price is called the new issue price. The issue prices do not include accrued or retained but unpaid interest. The interest is paid only on the coupon or on the date of payment of the interest of a bond. This is usually a semi-annual payment.
The diffusion does not refer to the favorable rate of interest, but in relation to the relative rate of interest between a bond and a bond index, a treasury security with the same or similar maturity, or otherwise similar or different credit bonds. The relationship of the diffusion continues to change. Bond professionals use historic historical divisions to consider whether a particular bond is expensive or expensive relative to its historical margins. Spreads tend to be compressed during times of a strong economic cycle and high interest rates. The diffusion relations are expanding when rates are lower due to weaknesses in business bases that increase concerns about credit risk. A 10-year bond with 8 percent return and a 20-year bond with 10 percent yield has a net spread of 10 minus 8 or 2 percent.