What is Bond Floor?

and Bond Floor is the maximum reduction in the value that the bond problem can experience when it allows the rest of the repayment to be conformed and any other future interest that has a bond between the present and the maturity point. The term is also used to indicate the minimum or flooring of the portfolio, as defined in a certain type of portfolio of constant ratio. In this scenario, the level defined in insurance protects the investor from loss after a certain point.

Since bond floors relate to convertible bond problems, the establishment of this minimum amount helps to increase the attraction of this type of bond for investors. I protect bond buyers from at least part of a possible shift down in the price of the shares of the underlying asset, investors can be ensured that they earn at least this minimum return on bond. At the same time, convertible bonds offer a potential increase in value if the underlying asset will appreciate the worthyOTU, when and as investors decide to exercise the right to transfer these bonds.

The presence of bond floors in constant insurance provides a similar level of protection for investors. Since this type of insurance is often a good idea to diversify the financial portfolio, the investor can use this mechanism to secure the possibility that some tenure will reduce value. While the diversified portfolio usually contains securities that carry different levels of risk, some of these assets could experience some kind of decline. By transferring insurance in the portfolio using this type of built -in bond, the risk of experiencing more than some losses at a given moment is kept to a minimum. At the same time, the coverage does not prevent the growth potential of the portfolio, the effect of the investor's provision and just lose a little.

In both applications, the concept of bond DNA is to provide investors with more withoutThe roast that their investment will earn at least a certain return, at least in terms of loss of more than a certain amount. When the presence of this type of floor is associated with investment options, which show that we gain time rather than a waste of time, it simply increases the chances of gaining a decent level of return on investment activities. Investors often look closely at this lower line or bond floor and are considering this aspect of the investment directly with a potential return.

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