Question

provide examples of different types of bonds in terms of coupons and maturity

Answer 1

Different types of bonds in terms of coupons and maturity are discussed below:

• Fixed rate bonds – These bonds have a coupon that remains constant throughout the life of the bond.
• Floating rate bonds or notes – These bonds have a variable coupon and it is linked to a reference rate of interest like Libor.
• Zero coupon bonds – These bonds have no coupon rates and interest payment is effectively rolled up to maturity.
• Perpetual bonds – These bonds have no maturity date and the bond will make interest payments forever.
• Callable bonds – These bonds can be redeemed by the issuer prior to its maturity.
• Puttable bonds – The holder of a puttable bond has the right (and not an obligation) to demand early repayment of principal.