RESEARCH STUDY PRESENTATION ON INVESTMENT IN BONDS

BY Group No. 5:
AMIT BEHAL ARCHIT SINGHAL FRIZO JOHN LUBHANA JUNEJA

Literature
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals

Investments in Bonds Bonds are purchased directly from the issuing corporation or through an organized bond exchange. Bond prices are quoted as a percentage of the face amount. A premium or discount on a bond investment is recorded in a single investment account and is amortized over the remaining life of the bonds.

Why should I Invest in bonds?

1. They offer higher returns than bank accounts. 2. They provide fixed interest payments. 3. Can customize your investment choice depending on return and risk preference.

Conceptualization
Reference period : 1 year Type of Investigation : Applied Research Participants: Corporate people/Working People

Information Collection Framework

Selecting Method of data :Primary sourcesgetting respondent to answer the questionnaire. Scaling Techniques : Quantitative Sample Selection : People working corporate/banks. Sample Size : 20 Type of Sampling : Simple

What we are studying?

Government Bonds Public Sector Undertaking Bonds Pros and Cons of Investing in Bonds ROI available Who should go for bonds who should not Why Banks go for Government Bonds?

Analyses and Interpretation of Data

30% of the people invest - wealth preservation 60% primary objective of investing is source of income 50% of people believe that their income will increase slightly in the next five years 50% believe that their income will increase significantly.

 70% invest in PSU bonds,20% in government bonds and 10% in private sector bonds. 50% of the people think that they will reinvest between 20% and 80% of their earnings . 60% people believe that their living expenses could be safely covered

 40% -mix of equity securities and government bonds Other 40% feel that government bonds are secure. 20% - equity securities investment is safe in terms of risk return trade off. 70% people are concerned with the safety of their investment income before choosing an investment.

 60%-Risk Neutral Investors 30%-Risk Averse Investors 10%-Risk Lover Investors

 Majority is not experienced when it comes to investing in bonds.

50% of people said they prefer deposits under

post office .

20% believe that deposits with a banking

company.

 60% of people invest in Floating Rate Bonds

while 40% invest in Zero Coupon Bonds.

70% not familiar with the benefits and non

benefits of investing in bonds.

75% do not maintain records related to their purchases and sales of bond-financed assets.

 90% feel Infrastructure Bonds are good to

invest in.
Majority answered long term bonds to invest in.

What is Rate of Interest Available?

40% said 7% is the common interest rate while other 40% said 8-8.5% Only 20 % said 6% Example: 8 percent Savings Bond

CONCLUSIONS

Bond Market in India

The Bond Market in India with the liberalization has been transformed completely.

The bond market in India plays an important role in fund raising for developmental ventures.

GOVERNMENT BONDS
Government bonds refer to the bonds issued by the Government or the government department of a country in its own currency. The returns depend on the type of the bond! Some have a fixed rate of interest, say 8%, and some are linked to the market or the inflation in the country.

Public Sector Undertaking Bonds

Medium and long term obligations.

Government share holding is generally greater

than 51%.

Corporate Bonds
Higher risk but more return.

Offered by private corporations in India for terms that can last up to 15 years.

Tax-Savings Bonds
Most of them are issued by India's Reserve Bank. These five-year bonds are sold at an interest rate of 6.5 percent and interest is paid off every half-year. The upside for the investor is that by purchasing this bond, they are released from paying taxes on the related interest income, as long as they hold the bond until it matures.

Pros and Cons of Investment In Bonds

Advantages of Investment In Bonds
One of the benefits of investing in bonds is that they might be a little more secure than stocks. Investing in bonds provides a predictable stream of income. Diversification => Reducing Risk

 Disadvantages of Investment in Bonds

Most bonds have a call option. When interest rates go up, the price at which the bond can be sold goes down. Long-term bonds can tend to be volatile. If the issuer of the bond declares bankruptcy, one may lose his or her money. Selling bonds before theyre due may result in a loss.