The value that represents the face value of the financial instrument basis on which the payments are calculated is named as Notional amount. Simply, it is the assumed principal amount of a financial contract on which the exchanged interest rates are based. For example, A and B entered into an agreement to exchange interest payments with each other. A holds an investment that is valued at Rs. 1…

A bond is a debt agreement issued by an individual or a company to raise money. When a debt is raised there are various terms and conditions as well as attributes attached to the respective debt. A bond is always accompanied by the details such as the price of the bond, quantity of the bonds issued, issue date, coupon rate, maturity date and so on and such details are provided on…

Real Rate of Return simplified for investors

Many readers are often confused between the concept of yield and return. Generally, they sound similar when discussing investment decisions. However, there is a difference between Return and Yield. Return is basically backward-looking in nature whereas Yield is forward-looking in nature. Simply, a return is defined as a quantity of amount an investment generates over time. In other words, how…

Before understanding “Revenue Bond”, let us understand the basics of the term Revenue. Revenue simply means total income generated from the sale of goods and services of the company’s primary operations. On the other hand, a bond is a loan from an investor to a borrower such as a company or a government. A revenue bond is a type of municipal bond in which the obligated repayment of the…