What is the Japanese government bond?
When the Japanese government requires funds, it lends them from the public by issuing bonds. The Japanese government bond has a fixed initial price, due date and maturity value. Investors buy Japanese government bonds and earn profits in the form of voucher payments or maturity values that are higher than the price that investors have originally paid for buying bonds. The Japanese government bond is a relatively safe financial tool because payments are guaranteed by the Japanese government. Several types of Japanese government bonds are available to Japanese and non -Japanese investors and intermediaries.
When a Japanese government bond first enters the market, the investor pays a predetermined price for its purchase from approved financial institutions. At maturity, the investor will receive the money he paid for the purchase of the bond. In the case of discount bonds, the investor is paid less than the maturity. In the case of coupon bonds receive coupon payments every six months runHEM LIFE OF THE BONTH. Another type of coupon bond, known as bonds with a movable rate, is associated with a floating interest rate and the amount of each voucher payment varies.
The investor does not have to stick to the Japanese government bond from the initial purchase to maturity. The market trades these bonds and investors can buy or sell them at any time before maturity. The market price could differ from the initial purchase price depending on the factors such as supply, demand, competition with other types of bonds and the economic situation in Japan.
The return that the investor earns to Japanese government bonds is expressed as a ripeness of maturity. It depends on the price the investor paid for the purchase of a bond, coupon rates and the time between purchase and maturity. The proceeds for the return to the maturity is [(nominal coupon rate in percent) + ((& yen; 100 - purchase price) / maturity in years) / purchase price. YouMultiply the result of 100 to get yield before taxation as a percentage.
Japanese government has a wide range of maturity. Discount bonds have a short maturity between six months and one year. Coupon bonds have a maturity between two and 40 years.
The Japanese government bond also has different initial purchase prices for different types of bonds that problems. Ten -year -old bonds with moving floating and five -year bonds for retail investors have the lowest purchase price. Short -term discount bonds have the highest purchase price.