What is a bond / CD?
- Bonds, issued by governments including China, the US and Hong Kong, local quasi-government bodies, supranationals and well-known corporations around the world.
- CDs, issued by different high credit quality financial institutions like banks.
- Initial Public Offerings (IPOs) for various bonds and CDs.
For more information, access IFEC's The Chin Family website.
|Face value||Offer price||Coupon rate||Coupon frequency||Maturity date||Initial payment|
|USD100,000||98%||3%||Annually||1 Jan, Year 3||purchase amount USD98,000 + accrued interest* USD41.67 = USD98,041.67|
|Maturity date||1 Jan, Year 3|
|Initial payment||purchase amount USD98,000 + accrued interest* USD41.67 = USD98,041.67|
Scenario 1: He holds the bond for 2 years until its maturity
Mr Chan will receive an interest payment of USD3,000 (USD100,000 x 3%) in Year 2, on 1 January.
He will receive the final coupon payment of USD3,000 and the face value amount of USD100,000 in Year 3, on 1 January.