Bonds are debt securities, the owner of which has the right to receive from the issuer, within a predetermined time frame, of its value at par - both in money and in the form of other property. From an economic point of view, a bond resembles medium to long term lending. So is it worth selling the bonds you have in your hands, or is there no need to rush into this?
Instructions
Step 1
It is more correct to pose the question not of how to sell bonds, but when to sell them. Sometimes it is more profitable not to sell this type of securities, since regular bond payments can in themselves be a source of additional income. So you can just wait for the bond's maturity date. However, in this case, you assume a certain risk, because inflation can devalue the face value of the security.
Step 2
First of all, the risk of depreciation concerns those bonds that expire in 5-7 years or more. You can reduce your risk by purchasing one-year coupon or discount bonds.
Step 3
You can repay the bond ahead of schedule, without waiting for the time set by the issuer. The debtor company redeems the securities at par, that is, at the amount indicated on the bonds. Often, early redemption is initiated by the debtor himself so as not to pay interest. Early redemption is usually indicated on bonds.
Step 4
There is another way to part with a bond - to convert it into stocks. However, not all bonds allow you to do this. When converting bonds into shares, the owner will lose interest, since he will become one of the co-owners of the enterprise, and the money will go to its development.
Step 5
Sometimes bonds can act as collateral, like a bill of exchange. So, apartment bonds from a developer are provided with square meters, not money. It is quite possible to sell such bonds, but only through the exchange and with the obligatory notification of the developer.
Step 6
A simple sale of bonds is also possible. As a rule, this is done when deposits with more favorable interest rates appear in banks. In this case, the proceeds from the sale of bonds can be directed to a deposit. The procedure for selling is practically no different from buying: you need to give an instruction to the broker by phone or put the bond up for sale via the Internet. Bonds that were last traded a long time ago may sell with some difficulty and time delays.
Step 7
The price of a bond is largely determined by the number of unpaid coupons and the general solvency of the issuing company. An interest bearing bond can be sold either above or below par. Consider also the fact that bonds will fall in price as interest rates on deposits in the largest banks rise. Recently issued bonds are usually sold at par.
