What is the difference between Coupon rate and Yield?
The Coupon Rate represents the fixed annual interest rate a bond pays based on its face value. In contrast, Yield refers to the total return an investor can expect from a bond, considering its price, coupon payments, and maturity. Yield accounts for current market conditions and reflects the bond's overall return, which can vary over time.
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What is the difference between YTC, YTM, and Coupon?
YTC (Yield to Call): YTC refers to the yield an investor would receive if a callable bond is held until its call date, considering the bond's market price and the call price. Callable bonds give the issuer the option to redeem the bonds before the ...
What is the tax rate on the interest earned from bonds?
Interest Income from Bonds Interest earned on bonds is generally taxable as part of an individual's total income and taxed according to their income tax slab. For instance, if Mr. Anuj invests Rs. 10,00,000 in a taxable bond yielding 15% annually, ...
What is the difference between Face Value and Investment Amount?
The Face Value of a bond refers to the predetermined amount at which the issuer will redeem the bond at its maturity. On the other hand, the Investment Amount represents the minimum sum required to purchase a bond, as set by the issuer. In essence, ...
What are the tax implications on INR Bonds?
Listed Bonds Listed bonds are those that are traded on recognized stock exchanges. The tax treatment for capital gains arising from these bonds is as follows: Long-Term Capital Gains (LTCG): If a listed bond is held for more than 12 months, any ...
What are the possible risks associated with Bonds?
While bonds offer a generally low-risk compared to equity investments, there are still potential risks to consider, a few of those include: Interest rate risk: This is the biggest risk for all bonds. If interest rates rise after you've purchased a ...