What is a Bullet Bond?
” The bullet bond is an example of a bond that cannot be redeemed before the date of maturity has arrived. This characteristic separates the bullet bond from a callable bond, in that the bullet bond has a guaranteed interest rate that cannot be changed at any time before maturation. . Bullet bonds are usually issued with a lower rate of interest. This is because the bullet bond is considered to be a low risk investment. Because it is not possible to call the bond before the maturation date, there is no opportunity for the applied interest rate to rise or fall. While the interest rate is fixed, the investor will pay for this level of protection.
The bullet bond is an example of a bond that cannot be redeemed before the date of maturity has arrived. This characteristic separates the bullet bond from a callable bond, in that the bullet bond has a guaranteed interest rate that cannot be changed at any time before maturation. Bullet bonds are usually issued with a lower rate of interest. This is because the bullet bond is considered to be a low risk investment. Because it is not possible to call the bond before the maturation date, there is no opportunity for the applied interest rate to rise or fall. While the interest rate is fixed, the investor will pay for this level of protection. The typical bullet bond is more expensive than callable bonds, where there is some possibility of being impacted by falling market interest rates. For people who are new to investing, the bullet bond can be an excellent way to begin establishing a portfolio of assets. Because the bond maturity date for a bullet bond is fixed, and the rate of interes
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- What is a Bullet Bond?
