Introduction In the bond market, risk is not always visible at first glance. A company may have a rating, a coupon and a maturity date, but investors still want to know how risky the borrower looks in the market. This is where CDS spread helps. It gives a market-based idea of how costly it is […]

Credit derivatives can be useful, but they are not simple products. The first risk is counterparty risk. The protection buyer depends on the protection seller to honour the agreement. If the seller is unable to pay when a credit event happens, the protection may not work as expected. Valuation is another challenge. The price of […]

A bond investor may often come across two bonds with different yields and wonder why one is offering more than the other. At first, the answer may look simple. The higher-yield bond seems more attractive. But in the bond market, a higher return is rarely offered without a reason. That reason is often linked to […]

Many investors first look at the coupon of a bond. That is useful, but it is not enough. Bonds can trade above or below face value. So the income on today’s price may be different. Current Yield helps investors see that number clearly. Key Takeaways What Is the Current Yield? How Does Current Yield Work […]

Introduction Imagine you’ve just bought a 10-year government bond, expecting steady returns. A few months later, the Reserve Bank of India (RBI) announces an interest rate hike. Suddenly, the value of your bond starts dropping. You begin to wonder: how can a central bank’s decision influence the value of your bond? This question highlights the […]

In any securities market, a trade is complete only when two things happen: the buyer gets the securities, and the seller gets the money. But what if one side delivers and the other side does not? That is where delivery versus payment becomes important. It is a settlement method built to make securities transactions safer […]

Introduction If you happen to be an investor with a limited risk appetite and are looking for investment options with an assured return on the capital, bonds and fixed deposits are ideal for you. Fixed deposits are accepted by both banks as well as Post Offices across the country. Both these investment options are low […]

Introduction In today’s day and age, there are various investment options to choose from. While some options may appear lucrative because of potential high returns, they involve potential risks to capital. For relatively lower risk – investment in NSCs and Bonds are the two most popular options. If you want to be conservative with your […]

Coupon Rate Vs Bond Yield: What are the Differences? The coupon rate and bond yield are important concepts associated with bonds. If you want to invest in bonds, you should know about the bond coupon, bond yield, bond investment return, and the major differences between coupon rate and bond yield (Coupon Vs Yield).  A coupon […]