Question-16: What are the sinking fund provisions in case of Fixed Income or bond market?

Answer: Many industrials and some utilities have sinking-fund provisions, based on that it is a mandate that the firm retire a substantial portion of the debt, based on some prearranged schedule, during its life and before the stated maturity.

Question-17: What do you mean by serial bond?

Answer:  Serial bonds are the bonds which are bundles of bonds with differing maturities.

Question-18: What is the possible maturities of the bonds?

Answer: Generally, the corporate bonds are having between 1 and 30 years, there are some deviation as well for maturity like longer-term debt to lock in long-term financing. It was also seen bonds with the 100 years of maturity.

Question-19: Can you classify the bonds based on maturity?

Answer: Yes, it can be. But this is not standard practices usually they are classified as below

• Short term: Maturity with 1 to 5 Years.
• Intermediate term: Maturity with 5 to 12 Years. (These are also referred as notes)
• Long term: Maturity above 12 Years.

Question-20: Can you describe the bond’s coupon?

Answer: A bond’s coupon is the periodic interest payment made to owners/investors during the life of the bond. The coupon is always pre-mentioned, with maturity, with the bond’s price. Suppose you are having a bond “CompanyA 5.3 due in 2036”. So here coupon rate is 5.3%, this is rate of interest. To get the dollar value of the interest, you have to multiple the coupon with the principal, par value, or face value of the bond. Bonds issued in the United States, the coupon payment is made in semiannual installments.