In Fixed Rate Bonds, the interest remains fixed through out the tenure of the bond. Owing to a constant interest rate, fixed rate bonds are resistant to changes and fluctuations in the market as the rate of interest remains fixed for a fixed tenure.
In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds. Bonds can be in mutual funds or can be in private investing where a person would give a loan to a company or the government.
On the other hand, an FD known as Fixed Deposit is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. Bonds and Fixed Deposits (FD's) are widely considered the two most popular alternatives for risk-averse investors across the world. While both bonds and FD's are 'fixed income' instruments in the sense that they offer interest income to investors, they actually differ markedly across various parameters.
In Fixed Rate Bonds, the interest remains fixed through out the tenure of the bond. Owing to a constant interest rate, fixed rate bonds are resistant to changes and fluctuations in the market as the rate of interest remains fixed for a fixed tenure.
Zero coupon bonds are bonds that do not pay interest during the life of the bonds. Zero Interest Rate Bonds do not pay any regular interest to the investors. In such types of bonds, issuers only pay the principal amount to the bond holders.
Inflation-linked bonds, or ILBs, are securities designed to help protect investors from inflation. Bonds linked to inflation are called inflation linked bonds. The interest rate of Inflation linked bonds is generally lower than fixed rate bonds.
Bonds which are given less priority to other bonds of the company in cases of a close down are called subordinated bonds.
Bearer Bonds do not carry the name of the bond holder and anyone who possesses the bond certificate can claim the amount.
Climate Bonds are issued by any government to raise funds when the country concerned faces any adverse changes in climatic conditions.
