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Fixed Interest Investments Home | Bond
Basics | Sovereign
Bonds | Corporate
Bonds | Euro Bonds
Government-issued securities such as War Stock are
often referred to in the UK as Gilts. These enable a sovereign state
to borrow money - thus the term "Sovereign Bonds" - in exchange
for a guarantee on the capital and a competitive return.
US and Western European issues offer a low-risk
environment, while areas such as Latin America or Russia offer higher
returns but an element of risk in defaulting. Most of these securities
mature at par (100 percent of nominal value) but can be purchased
above or below par, depending upon the interest rate (V's) and the
securities return (coupon). Taking
this into consideration, the true yield if held to maturity
can be calculated.
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