Phantom 1 Report post Posted August 28, 2007 wats dat? name of a fixed deposit?Its a bond.Bonds are an instrument that goverment or instituitions use to raise cash.Its like an IOU that means you "lend" the government or instituition money and they will pay you an interest on your capital.its one of the safer type of instruments. Typically higher interest means higher risk. lower interest lower risk.Olam is a listed company and if you buy their bond at say $102.. then they pay you maybe 3.6%p.a... after 1 year example they return you your money at $100.If you average out the return, its about 3.1 or 3.2%.. thats called effective yield or yield to maturity.the risk is default risk. meaning company or government go bankrupt.if not. its interest rate risk... because if interest rates increase, par value drops. if interest rates decline, par value goes up... Share this post Link to post Share on other sites
