Investing in Bonds and real Estate. Accounting, Finance Coursework (Coursework Sample)
The task was to answer various question on bondS and real estate. This sample provides solutions to each of these problemssource..
RUNNING HEAD: INVESING IN BONDS AND REAL ESTATE
Investing in Bonds and Real Estate
Asia Pacific University of Technology and Innovation
Q1. The concept of investing in bonds
A bond is an instrument of debt. It is issued by a party regarded as an issuer to the investors. Generally it is the issuer who owes the investor. It is usually used to raise capital to fund the issuer’s projects and operations. The main issuers of a bond are the governments, municipal authorities, corporates firms and federal agencies giving rise to government bonds, municipal bonds, corporate bonds and federal bonds.
Elements of a bond
Coupon-This is the interest received from a bond. It is the regular fixed income an investor expects from a bond. Bonds are usually issued with a coupon rate which is the equivalent of interest rate in a loan contract. The coupon rate is a percentage.
Face Value -This is the amount that the issuer of the bond uses in calculating coupon and also the amount that the bond will be worth at maturity.
Coupon dates-This are the dates on which the issuer of the bond pays the coupon (interest) for the bond.
Price of a bond-This is the price which can be realized if the bond is sold at that particular moment. It is usually determined by market conditions.
Maturity date of the bond-This is the date on which the issuer of the bond pays the bond holder or investor the face value of the bond.
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