Question-6: What are the common provisions which can affect the bonds characteristics?

Answer: There are some important provisions as below

• Call privilege
• Put features
• Sinking fund.

These characteristics of the bonds vary with the obligor or issuing authority.

Question-7: Can you explain the Maturity in Fixed Income or Bond Market?

Answer: Maturity is a key feature of any bond is its term-to-maturity, which represents number of years during which the borrower has promised to pay back the entire debt and needs to be specified in bond’s indenture. A Fixed Income Bond’s term-to-maturity is the date on which the debt will cease and the borrower has to pay back face value, or principal.

Question-8: Is there a way by which you can find the Bond Maturity at looking the name of the bond?

Answer: Yes, you can one indication of the maturity is that the code word or name for every bond contains its maturity and coupon. For example CompanyA bond which is maturing, in 2036 is given as “CompanyA 85/8s of 2036.”

Question-9: What is the difference between term-to-maturity and maturity of a bond?

Answer:  Generally, people use both maturity, term, and term-to-maturity interchangeably to refer to the number of years remaining in the life of a bond. But technically speaking the differ,

• Maturity: represent the date the bond will be redeemed
• Term or term-to-maturity: represents the remaining number of years until that date.

Question-10: Why maturity of a bond is so crucial?

Answer: A bond’s maturity is very important because of various reasons as below.

• Bond Life: Maturity represents the expected life of the instrument
• Bond Coupon: The number of periods during which the holder of the bond can expect to receive the coupon interest
• Principal: The number of years before the principal will be paid.
• Yield: the yield on a bond depends substantially on its maturity.
• Bond Price: Bond price volatility is closely associated with maturity.
• Risk: Maturity also affects the risk of the bonds.