9. Issue Price: The price at which the company’s shares are offered to the market for the first time. When the shares are traded, the market price may be above or below the issue price. The initial price of a share or other security is termed as issue price.
10. Redemption Price: The term redemption connotes repayment obligation. The term redemption price means the price at which the preferred shares or bonds may be redeemed. It is fixed at the time when the shares are issued.
11. Zero coupon bonds: As the name hints; a bond that is sold at a deep discount as against its face value but matures at its face value, without inviting coupons are called as zero coupon bonds. A zero coupon bond is free from the risk of reinvestment though the setback is that there are no opportunities to enjoy the rise in the market interest rates. Generally, the markets for the zero coupon bonds are relatively illiquid.
12. Deep discount bond: The bond that is sold a significant difference on a scale lower than the par value is termed as deep discount bond. A bond that is selling from less than the par value and has a coupon rate significantly less than the prevailing rate of interest on a same risk profile security. These bonds are normally traded at 20% less than the par value.
13. Perpetual Bond: A perpetual bond is a bond with no maturity date. Perpetual bonds are not redeemable but pay a steady stream of coupon rate forever. The price of a perpetual bond is therefore the fixed interest payment, or coupon amount, divided by some constant discount rate. The discount rate denominator reduces the real value of the nominally fixed coupon amounts over time, eventually making this value equal zero. As such, perpetual bonds, even though they pay interest forever, can be assigned a finite value, which in turn represents their price.
14. Annuity bond: Annuities are equal amounts of receipts are payments made at the beginning or at the end of the year. It is a bond that pays the investor equal amount of cash every year over the life of the bond. Payments take the form of increasing principal and declining interest.
15. Redeemable bond: A bond which the issuer has the right to redeem prior to its maturity date, under certain conditions. When issued, the bond will explain when it can be redeemed and what the price will be. A company will often call a bond if it is paying a higher coupon than the current market interest rates. Generally, redeemable bonds will carry something called call protection. This means that there is some period of time during which the bond cannot be called. Also called callable bond. Opposite of irredeemable bond or non-callable bond.
16. Irredeemable bond: Irredeemable bond without a call feature (issuer’s right to redeem the bond before maturity) or a redemption privilege (Holder’s right to sell the bond back to the issuer before maturity. It takes the character of a perpetual bond. It is a non callable bond.
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