Registered Bonds - These bonds carry the owner's name for the
principal or interest.Most bonds today are registered for principal only.
If stolen or lost, registered bonds can be easily replaced.
Bearer Bonds - These are unregistered negotiable bonds and
assumed to be the property of their holders. They normally cannot be
replaced if lost or stolen as they become the property (albeit unlawfully)
of their finders or robbers.
Coupon Bonds - This type of bonds come with detachable coupons
representing their interest payments. At the end of each interest period,
the bondholder clips the corresponding coupon and presents it to the
specified bank for collection. Today most coupon payments are handled
electronically. While the principal for these bonds is registered, the
interest is not.
Callable Bonds - The issuer of this type of bonds has the right to
call or buy back the bond before the maturity date. Usually a premium
is paid by the issuer if the bond is called. The long bond is a callable
bond with pre-determined dates when the bond can be called.
Convertible Bonds - These bonds give their holders the right to
exchange them for shares of stock of the issuing company at a given
conversion rate. This feature can be used for any type of bond to make
them more attractive.
Income Bonds - Usually issued by companies in bankruptcy, their
interest payments are linked to the earnings of the issuing company. In
this case missed interest payments do not necessarily mean default.
Term Bonds - These bonds have one maturity date for the entire
Serial Bonds - Unlike term bonds, serial bonds mature in
installments at different dates.
Zero Coupon Bonds - As we discussed previously, most bonds
consist of two elements: principal and interest (coupon) payments.
Zero coupon bonds, as the name suggests, do not have any interest
(coupon) payments. They are bought at a discount to their face values …