Now, let's look at an example to understand the characteristics that we have just

studied,
the terminologies and apply it.
So Angel Corporation issued a 10% bond with the face value of 1,005 years of
maturity.
So what does this mean?
The face value is 1,000.
So once the bond ends, when the bond matures, this loan amount of 1,000 will be
returned.
And on this loan, the coupon rate that is being paid is 10% so this is the coupon
rate
that is being paid on this bar value of 1,000 and the maturity is 5 years.
So after 5 years, the bond is going to end and the loan amount is going to be
returned
to the investor.
So let's calculate the coupon payment one.
So if you purchase a certificate, you will be giving a loan of 1,000 to Angel
Corporation.
And Angel Corporation in return will pay you the coupon rate of 10%.
So they will pay you 100 coupon payment.
Now let's assume that this coupon payment is annual.
So many bonds have semi-annual coupon payment and it can even be quarterly coupon
payment,
but for simplicity, we are going to assume that this coupon payment is annual,
which
means that the coupon payment will be made at the end of every year.
Because it has five years of maturity, that means at the end of first year, you
will get
a coupon payment of 100 because you're an investor, you have purchased the
certificate.
At the end of the second year, you will also get a coupon payment of 100.
At the end of the third year, you'll get a coupon payment of 100 once again.
At the end of the fourth year, you'll get 100 again and at the end of fifth year,
you'll
get 100 again.
Plus, because the bond does have a five year of maturity, once the five years are
done,
you will get your principal amount 1,000 back as well.
So this is the loan amount that you had given.
This will be returned to you as well.
So the certificate is going to end now.
Once the par value has been returned, the bond is going to end and there are going
to
be no more interest payments.
So I hope this is now more clear that what are the terminologies in bond.
Now let's look at another example, so you share and we're going to look at an
example
from our national saving website.
So this is Pakistan's national saving website.
Our government bonds are over here.
So if you're going to product certificate, you can see that these certificates,
defense
saving certificates, the regular income special saving, short term saving
certificates, these
are all examples of bonds, government bonds.
So if the government needs money and they want to borrow money from the general
public,
this is how they're going to borrow money, they're going to issue these
certificates
and we are going to purchase this certificate.
So let's go and see one certificate.
Waiting for it to load.
Okay, so now you can see this is the defense saving certificates or should
papakasanguamint
and you can see how the certificates look.
So over here, you can see 100,000 is written.
This is the par value, this is the stated value.
So once the bond matures, you will get this 100,000 back.
You can also buy these certificates at denominations of 500, which means you can
purchase it with
a par value of 500, 1000, 5000, 100,000, 500,000 and so on.
So there are so many different par values from which you can purchase is the
maturity
of this bond is 10 years and these bonds are being issued from 1996.
There is no investment limit.
So even if you have 1000 rupees, you can go and purchase this bond over here.
Let's see what else have they told us.
So you can see who can invest.
So all Pakistani nationals as well as foreign nationals can purchase being an
adult.
So anyone can purchase these bonds and your money will be invested over here.
They haven't mentioned the coupon rate over here, but if you want to go and see the
coupon
rate, you will have to go over here to check the rates.
So from here, you can see that what is the coupon rate that is being offered
depending
upon when you have actually purchased that bond, the latest rate is 8.11 percent,
which
is still late