Fixed Income Program

Fixed income doesn't rank high on the financial media's list of investments to cover, considering the alternative is a stream of exciting rumors from Apple (ticker: AAPL) or the latest vomit.

They are the government. Fixed-income securities can be contrasted with equity securities — often referred to as stocks and shares — that create no obligation to pay dividends or any other form of income. Click to hear sample clip. The term fixed income is also applied to a person's income that does not vary materially over time.

The Rise of E-Trading Platforms in the Fixed-Income Market

Fixed income is a type of investment in which real return rates or periodic income is received at regular intervals and at reasonably predictable levels. Fixed-income investments can be used to.

If an issuer misses a payment on a fixed income security, the issuer is in default , and depending on the relevant law and the structure of the security, the payees may be able to force the issuer into bankruptcy. In contrast, if a company misses a quarterly dividend to stock non-fixed-income shareholders, there is no violation of any payment covenant, and no default.

The term fixed income is also applied to a person's income that does not vary materially over time. This can include income derived from fixed-income investments such as bonds and preferred stocks or pensions that guarantee a fixed income.

When pensioners or retirees are dependent on their pension as their dominant source of income, the term "fixed income" can also carry the implication that they have relatively limited discretionary income or have little financial freedom to make large or discretionary expenditures. Governments issue government bonds in their own currency and sovereign bonds in foreign currencies. State and local governments issue municipal bonds to finance projects or other major spending initiatives.

Debt issued by government-backed agencies is called an agency bond. Companies can issue a corporate bond or obtain money from a bank through a corporate loan. Preferred stocks share some of the characteristics of fixed interest bonds.

Securitized bank lending e. Investors in fixed-income securities are typically looking for a constant and secure return on their investment. For example, a retired person might like to receive a regular dependable payment to live on like gratuity, but not consume principal. This person can buy a bond with their money, and use the coupon payment the interest as that regular dependable payment. When the bond matures or is refinanced, the person will have their money returned to them.

The major investors in fixed-income securities are institutional investors, such as pension plans, mutual funds, insurance companies and others.

The main number which is used to assess the value of the bond is the gross redemption yield. This is defined such that if all future interest and principal repayments are discounted back to the present, at an interest rate equal to the gross redemption yield gross means pre-tax , then the discounted value is equal to the current market price of the bond or the initial issue price if the bond is just being launched.

Fixed income investments such as bonds and loans are generally priced as a credit spread above a low-risk reference rate, such as LIBOR or U. The credit spread reflects the risk of default. Your personalized experience is almost ready.

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