Bonds

Bonds - How is a bond structured?

Level: Beginner / Length: 22 minutes / Pages: 19

In this module, we'll describe what happens when a bond first comes into existence. This is called the bond’s ‘issuance’ and there are a number of decisions that have to be made around this process. We'll look at how bonds are structured to make them attractive to investors and how the end-to-end process works.


The auction process involves investors bidding on the bond…

How much would you earn on an investment?


There are lots of factors relating to the initial investment, the rate of return and what happens at the end of the bond’s lifetime? There are also considerations to be made in regarding the issuers creditworthiness and the legal obligations. We’ll also give you an example of buying a bond and explain how and when you’d receive payments.

  • The auction process – bids, issuers and investors
  • What rate will you receive on your investment?
  • Buying a 5 year bond – how does it work?
  • Is the issuer creditworthy?