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    Data as on : 20/03/2024



    Getting Started
    What are bonds?
    Bonds are debt instruments that governments and corporations issue to raise funds from bondholders to fulfill various capital requirements, for funding various projects, expansion plans, etc. Typically, bonds offer a set interest rate over a specified duration and return the principal amount at the time of maturity.
    What are government bonds?
    Government bonds, or G-Secs as they are commonly known, are debt securities that the central and state governments of India issue. These bonds are issued by the Government to raise money to cover its budgetary deficit and other infrastructure development initiatives. Because of their low-risk structure, they are also known as risk-free gilt-edged securities.
    What is a corporate bond ?
    A corporate bond is a debt security issued by a corporation or private institution to raise capital for a variety of reasons like expansion, new projects, etc.
    What is the current yield of a bond ?
    The current yield of a bond is calculated by dividing the annual coupon payment by the bond’s current market price. It measures the expected annual return of a bond.
    What is the difference between Yield to Maturity and current yield?
    The yield to maturity indicates a bond’s return on total value upon maturity, including all interest payments and the return of the principal. On the other hand, current yield indicates the current income generated by a bond based on the current bond price.
    What are the factors to take into consideration while investing in bonds ?
    Investors must have a comprehensive understanding of how bonds function before investing in bonds. The factors to be considered include:
    • Whether a bond is secured or unsecured.
    • Credit rating of the bond.
    • The expected return and risks involved.
    • Callable option of the bond issuer.
    • Debt obligations of bond issuer.
    • Maturity date and risk capacity.
    • Check out for secondary market liquidity.
    What are Sovereign Gold Bonds ? Why invest in it ?
    Sovereign Gold Bonds (SGB) are government securities issued by RBI on behalf of thegovernment and are valued in grams of gold.They are alternatives to owning physical gold.
    • Safety and Security - As SGBs are held electronically in a Demat account, it provides securityand there are no hassles of storing and safeguarding risks.
    • Fixed income - SGBs offer a consistent source of income with a fixed 2.5 % interest rate p.a.
    • Capital appreciation - When the cost of gold increases, the value of the SGBs will be appreciated.
    • Tax benefits - Tax Deducted at Source(TDS) does not apply to the interest income earnedthrough SGBs.Also, capital gains tax is exempted from redemption if the bonds are held until maturity.
    Why to invest in G - sec ?
    Government securities / Treasury Bills are securities backed and issued by the Government ofIndia through RBI and are of multiple tenors.
    Reasons to invest in G - sec are:
    • G - secs are low - risk instruments as they are backed by the government for interestpayments and principal repayment.
    • G - secs can be held in a digital form in a demat account.
    • Government bonds are available in a diverse range of maturity options from 91 daysto 40 years.
    • G - secs can be tradable on exchanges so can be sold and transferred.
    • When investing in Government Securities, the investors have the added advantage ofpledging the securities for cash margin requirements.
    • Risk - free investment option with no credit risk associated.
    Why invest in Bond Public Issue ?
    The reasons to invest in Bond Public Issues are:
    • Low Ticket Size - The minimum amount of investment in a bond public issue is Rs. 10000 whichis ideal for investors with a moderate amount to invest.
    • Regular Source of Income - Bond public issue offers a fixed interest rate thereby providing asteady source of income.
    • SEBI Regulated - There are stringent guidelines and regulations for Bond Public Issues whichare regulated by SEBI.
    • Listed - Bond Public Issues are listed on the stock exchange; so the holders have the option toexit from the investment prior to maturity date.
    Why is bond selection important for optimal portfolio management ?
    Bond selection is important for optimal portfolio management for the following reasons:
    • Risk management - It can reduce the risk of default and can stabilize the overall portfolio.
    • Income generation - The selection of bonds with attractive yield and consistent couponpayments contributes to the overall income generated by a portfolio.
    • Capital preservation - Selecting high - quality bonds with low default risk and strong creditratings protects the principal investment.
    • Duration management - Bonds with varying durations help to adjust the overall portfolio’ssensitivity to interest rate movements.
    • Portfolio diversification - Bonds with different maturities, issuers, and credit qualities canreduce the overall risk and enhance the risk - adjusted returns of their portfolio.
    • Liquidity & accessibility - The selection of liquid bonds allows investors to buy or sell their positions, ensuring liquidity when needed.
    What is Face Value ?
    The face value is a security's nominal or stated value as stated by its issuer. For bonds, itsignifies the amount paid to the holder upon maturity also known as “par value”.
    What is the coupon rate ?
    The coupon rate is the interest rate that bond issuers provide to bondholders on the bond’sface value.
    What are primary and secondary markets ?
    Primary bond markets refer to the market where newly issued bonds are sold. These bondscan either be sold via public offering of bonds or exclusively sold to qualified investorsthrough private placement.The secondary market is where investors engage in the trading of securities without theinvolvement of the issuer of bonds.The prices of securities in the secondary market aredetermined by the prevailing supply and demand dynamics.
    What is the difference between ‘face value’ and 'investment amount' ?
    The face value is a security's nominal or stated value as stated by its issuer. The market priceis the price at which bonds are traded.The investment amount is the sum that an investorpays to purchase a bond which is the sum of the market price and accrued interest.
    What are the differences between coupon rate and yield ?
    The coupon rate is the interest rate that bond issuers provide to bondholders based on the bond’s face value.The yield to maturity indicates a bond’s total value upon maturity, including all interestpayments and the return of the principal.The yield varies inversely with the market price ofthe Bond.The key difference between a coupon rate and yield to maturity is that the coupon rateremains constant over the bond’s tenure while the yield to maturity keeps fluctuating basedon various factors such as the prevailing market price of the bond and the time left until its maturity.For further insights, please visit
    What are the characteristics of bonds ?
    There are several characteristics of bonds that investors should take into consideration.Face value - The face value is the nominal or stated value of a security as stated by its issuer.For bonds, it signifies the amount paid to the holder upon maturity also known as “par value”.Coupon rate - The coupon rate is the interest rate that bond issuers provide to bondholdersbased on the bond’s face value.Maturity date - Maturity is the time when the bond issuer must repay the original bond valueto the bondholder. Tenure - Tenure or term denotes the period after which bonds mature.These contractsrepresent financial debt agreements between issuers and investors, which remain valid onlyuntil the conclusion of the specified tenure. Price - Bond price is the present value of the bond’s future cash flows and fluctuates in response to changes in the supply and demand of the bonds.Yield to maturity - The yield to maturity indicates a bond’s total value upon maturity, includingall interest payments and the return of the principal.
    What is the difference between bonds and stocks ?
    A bond is a debt instrument whereas a stock is an equity investment. The primary difference between bonds and stocks is that stocks represent ownership of a small portion of a company while bonds represent debt owed by an entity. Another difference is that stocks may or may not grow in value, while bonds pay fixed interest over time with repayment of principal amount on maturity.
    What is the difference between bonds and mutual funds ?
    A bond is a debt instrument whereas, in a mutual fund, money is pooled from variousinvestors and invested in a bucket of stocks, bonds, and other assets managed by a team offund managers.Bond duration is mostly long - term and exceeds 3 - 5 years whereas mutualfund duration can be short - term or long - term.For a comprehensive understanding, visit
    What is the duration and convexity of a bond ?
    Duration quantifies the number of years it would take for an investor to be repaid a bond’s price through the sum of all the bond’s cash flows. It measures the sensitivity of the bond’s prices or other debt instruments to changes in interest rates. The higher the duration, the more of a bond’s price will drop as interest rates rise.
    Convexity refers to the curvature in the relationship between bond prices and bond yields. It tells about the way a bond’s price and yield interact when it is subjected to interest rate changes.
    Are bonds subject to taxation ?
    Yes, bonds are subject to taxation. While investing in bonds, two types of income are earned.
    Interest income - When you invest in bonds / NCDs, you earn interest income until its maturity which will be subject to tax at applicable slab rates and TDS will be deducted(other than government bonds).
    Capital Gains - When an investor sells the listed bonds in the secondary market, capital taxmay arise - short - term capital gain / loss or long - term capital gains / loss which is determinedbased on the period of holding the bond.Short - term capital gains would be taxed at applicable slab rates.Long - term capital gains are taxed at a concessional rate of 10% without indexation benefits.
    What is an OBPP ?
    An OBPP, registered with SEBI is an online bond platform provider that facilitates the selling of listed bonds and non-convertible debentures on its platform, especially catering to retail investors.For a deeper insight, visit
    What is the difference between a fixed - rate bond and a floating - rate bond ?
    Fixed-rate bonds are issued for a fixed tenure with a fixed coupon rate while floating-rate bonds have a variable coupon rate. Unlike fixed-rate bonds, floating-rate bonds are vulnerable to interest rate movements.
    How can investors use bond ladders as a strategy for managing interest rate risk ?
    The bond laddering strategy consists of investing multiple bonds with different maturities; thus you constantly have bonds maturing. So if the interest rate rises, these bonds can be reinvested at the new market rate. Also, as each bond matures, the principal can be reinvested in new bonds with the longest term you originally chose for your ladder.
    What are callable and non - callable bonds, and how do they differ for investors ?
    A callable bond is a bond that the issuer has right to redeem or call back the bonds before it meets the said maturity dates.
    A non-callable bond is a bond which do not have a call provision. Once issued, the issuercannot redeem the bonds before their specified maturity date.