A Fixed Rate Bond pays a fixed amount of interest at regular intervals over a set length of time. Plan for your future goals confidently, knowing exactly when and how much you will earn with Fixed Rate Bonds.
- Fixed interest income for a stable return
- A wide range of bonds available
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Illustrative Example of a Fixed Rate Bond
Mr. Chan invested US$96,000 in a US corporate bond at market price of 96% at the end of 2009. Ther face value of the bond was US$100,000. The bond has the following features:
- Coupon Rate: 6% p.a.
- Maturity Date: September 15, 2015
Scenario 1: Mr. Chan holds the bond until maturity
Mr. Chan will receive an interest payment of US$6,000 (US$100,000 x 6%) every year before the maturity. On September 15, 2015, Mr. Chan will receive the final interest payment of US$6,000 plus US$100,000 for the face value of the bond.
Scenario 2: If Mr. Chan sells the bond with market price = 102%
If Mr. Chan sells the bond in March 2010 and the market price of the bond at that time is 102%, he will receive a pro-rata interest payment of US$3,000 plus US$102,000 (102/100 x US$100,000) for the sale of the bond.
Scenario 3: If Mr. Chan sells the bond with market price = 98%
If Mr. Chan sells the bond in March 2010 and the market price of the bond at that time is 98%, he will receive a pro-rata interest payment of US$3,000 plus US$98,000 (98/100 x US$100,000) for the sale of the bond.
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