Familiarity with investing in bonds / what are the types of tradable bonds in the capital market?

According to Tejarat News, securities are any type of paper that includes transferable financial rights for its owner. These bonds of any type, including ordinary shares, preferred shares, preemptive rights, bonus shares, partnership bonds, derivatives, options, futures contracts and sukuk, bring some kind of financial value to its owner.

Buying bonds is one of the ways of investing in the capital market, and there are various bonds in the market, and this report explains the use of each one.

debt securities

Debt bonds or bonds are bonds whose issuing company undertakes to pay a specific amount as interest to the bond holder in specific periods for the amount received from the buyer. Finally, after the end of the specified time and the due date, he is obliged to return the original amount received from the bond buyer.

Basically, the bond issuing company has the duty to return the invested amount and the resulting profit to the individual; The main point here is that the owner of the bonds does not have ownership in the company, and due to this feature, they are called debt bonds.

These bonds are often issued by companies that have difficulty in securing the capital required for their activities. Instead of borrowing money from banks, these companies borrow money from people and issue debt securities as evidence of this indebtedness. In financial science, this is called crowdfunding.

Bonds

Different companies can issue bonds in order to provide the financial resources they need to implement different projects. Buying these bonds by investors means their participation in the ownership of a real asset.

At the time of issue, the bonds are sold at their nominal price and for a certain period of time. At the maturity of these bonds, the investors will receive the principal amount of the investment and the profit from the desired plans.

Lease bonds (lease sukuk)

Renting sukuk means selling a specific asset to a large number of investors, each of whom has a share of the asset in question in the amount of purchased bonds. This means that the benefits from the asset accrue to the consumer in return for the rental payments.

The way of paying the rent is different and it can be paid to the investor in monthly, quarterly intervals or all at once and at the due date.

Islamic treasury documents

Islamic treasury documents are published with the aim of settling the government’s debt to contractors, the banking system, etc., and they have almost a lot of fans. The function of these bonds is in such a way that the contractor of the government account can wait until the maturity of the bonds to receive the amount owed; Even though he sells the bonds in the market below the original price and has a major part of his demand at the moment.

Purchase of derivatives

The value of derivatives is determined based on the specific asset on which they are issued. Futures contracts and options contracts are derivatives.

Derivatives are actually a type of securities with a price whose value depends on one or more assets from which they are derived. A derivative is a contract between two or more parties based on one or more assets. The value of the derivative is determined by the volatility of the underlying asset. The most common underlying assets are stocks, gold, commodities, currency, market indices, etc.

Future contracts

In a futures contract, the trading parties agree to trade a specified amount of a specific commodity at a specified time in the future; The important point here is that the price of this transaction is determined in the present and will be delivered in the future, which is very profitable considering the inflationary conditions of the country.

Option contracts

An option is actually a contract between the buyer and the seller of bonds, where the buyer buys the right to execute a specific transaction in the future by paying an amount to the seller. Although this derivative tool is most used in financial markets, it also has many uses in everyday life.

Papers

Housing facility bonds or tese are another type of bonds available in the capital market, which are issued by the housing bank and are used for the purpose of depositing for the purchase of housing. These bonds are purchased by the applicants at the time of using the mortgage loan.

In the end, it can be said that according to the economic conditions of the country and the state of the capital market, buying guaranteed bonds is one of the ways to deal with inflation.

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