Business Principles, Tools, and Techniques in Participating in Various Types...
Bond
1. BONDS
It is a fixed income (debt) instrument issued
for a period of more than one year with the
purpose of raising capital.
The central or state government,
corporations and similar institutions sell
bonds.
A bond is generally a promise to repay the
principal along with a fixed rate of interest on
a specified date, called the Maturity Date
BOND
1
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
2. In the Indian securities markets, the term
‘debenture’ is used for debt instruments
issued by the Central and State
governments and public sector
organizations and the term ‘bond’ is used
for instruments issued by private corporate
sector.
BOND
2
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
3. TYPES OF BONDS
Zero Coupon Bond
Bond issued at a discount and repaid at a face
value.
No periodic interest is paid.
The buyer of these bonds receives only one
payment, at the maturity of the bond.
BOND
3
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
4. CONVERTIBLE BOND
A bond giving the investor the option to
convert the bond into equity at a fixed
conversion price.
BOND
4
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
5. TREASURY BILLS
Short-term (up to one year) bearer discount
security issued by government as a means of
financing their cash requirements.
BOND
5
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
6. MUTUAL FUNDS IN INDIA
The first introduction of a mutual fund in India
occurred in 1963, when the Government of
India launched Unit Trust of India (UTI).
Market was made open to private players in
1993.
The first private sector fund to operate in
India was Kothari Pioneer, which later
merged with Franklin Templeton
BOND
6
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
8. MUTUAL FUNDS
Collective investment
Pools money from many investors
Invests it in stocks, bonds, short-term money
market instruments and other securities.
Fund manager
BOND
8
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
9. MUTUAL FUNDS : STRUCTURE IN INDIA
3-tier structure
First tier- Sponsor, who thinks of starting a
mutual fund.
The Sponsor approaches the Securities &
Exchange Board of India (SEBI), which is the
market regulator and also the regulator for
mutual funds.
BOND
9
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
10. Second tier- Once SEBI is convinced, the
sponsor creates a Public Trust as per the
Indian Trusts Act, 1882.
Once the Trust is created, it is registered
with SEBI after which this trust is
known as the mutual fund.
BOND
10
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
11. Third tier-Trustees appoint the Asset
Management Company (AMC), to manage
investor’s money.
BOND
11
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
15. The AMC’s Board of Directors must have at
least 50% of Directors who are independent
directors.
It is the AMC, which in the name of the
Trust, floats new schemes and manage
these schemes by buying and selling
securities.
Whenever the fund intends to launch a new
scheme, the AMC has to submit a Draft
Offer Document to SEBI.
BOND
15
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
16. After getting SEBI approval it becomes the
offer document of the scheme.
This certificate says that all the information
Provided inside the OD is true and correct.
A compliance Officer is one of the most
important persons in the AMC.
BOND
16
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
17. CUSTODIAN
A custodian’s role is safe keeping of physical
securities and also keeping a tab on the
corporate actions like rights, bonus and
dividends declared by the companies in which
the fund has invested.
Custodian is appointed by the Board of
Trustees.
Only the physical securities are held by the
Custodian.
BOND
17
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
18. AMC
Manage investor’s money on a day to day
basis.
All activities by the AMC are done under the
name of the Trust, i.e. the mutual fund.
The AMC charges a fee for providing its
services.
The fee is charged as a percentage of the
scheme’s net assets.
BOND
18
YOGESH NAMDEO INGLE. MBA
(FINANCE), NET (MANAGEMENT),
Ph.D (WIP), G.D.C &A, NCMP.
