pon rate. The end result, interest savings for the issuer. A puttable bond is a plain vani-lla bond with an option for the investors to sell or put the bond to the issuer at a date before maturity. Investors usually put a bond back to the issuer when they think that the money invested could be better used elsewhere. Convertible bonds gives investors the option to convert their corporate bonds into company stocks instead of getting a cash repayment. The terms are set at issue, they include the date the conversion can be made and how much stock each bond can be exchanged for. The conversion option usually lets the issuer offer a lower initial interest rate and makes the bond price less sensitive than conventional bonds to changes in the interest rate. Exchangeable bonds are the same except that the option is to convert to another entity's stocks. For example, Fullerton Global's 2003 zero coupon bond is exchangeable into Singa-pore Telecom shares. Other variations of the plain vanilla bonds include zero cou-pon bonds which does not pay out interest but interest accrues and is paid in a lump sum at maturity. A major appeal of investing in bonds is that they provide investors with a steady stream of income and barring defaults, guarantees the repayment of the loan in full at maturity. For the conservative investors, bonds also provide greater protection. E-quity investors are the last in line of all those who have a claim on the assets and income of the corporation. In a liquidation of the firm's assets, bondholders and other creditors will have to be paid first. For a firm not in liquidation, shareholders have claim to part of the operating income left over after taxes and interest to bond hold-ers have been paid. For secured bonds, in-vestors have the legal right to the asset that has backed the bonds. Some bond cove-nants provide further protection to the in-vestors by stipulating that the bonds can be put back to the issuer in the event the ma-jority shareholder sells down his stake or when certain financial ratios, eg. debt to e-quity ratio, breach a set level. Bonds can also be exciting with scope for capital appreciation. Take for instance a fall in interest rates, in this case bonds which were issued when interest rates were high will become increasingly valuable and as the bond price rises, this provides profit for bond sellers. Investors can also ''stock pick'' as they do in the equity market. Bonds do get mis-priced and investors who can pick this up can gain substantially. When sentiment towards Asia was at its low last year, the Petronas 2006 US$ bond was trading at a huge spread of 1,200 basis points over the equivalent U.S. treasury, and since then the spread has narrowed as fears over a possi-bility that the Malaysian governmen 2007-12-06 文章来自《中国免费论文网》商务英语论文论文频道 http://lunwen.52xoyo.com
