Vanilla Bonds-Corporate Bonds
Define the term Vanilla Bonds regarding Corporate Bonds?
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Vanilla Bonds:
• Such bonds have coupon payments which are fixed for the life of bond, and at maturity, the principal is remunerated and the bonds are retired.
• Vanilla bonds contain no special provisions, and the provisions they do contain are conventional and general to most bonds, like a call provision.
• Payments are generally made annually or semiannually.
• The face value, or par value, for most corporate bonds is of $1,000.
• The bond’s coupon rate is computed as the annual coupon payment (C) divided by the bond’s face value (F).
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