Name: Nguyễn Thị Ngọc Duyên

ID Student: K224020224

BEFORE-CLASS ASSIGNMENT

1. Who is responsible for paying bondholders?

The issuer of the bond is responsible for paying bondholders. The issuer is
the entity that borrows money from bondholders by selling them bonds. The
issuer can be a government, corporation, or other entity. In these cases
mentioned in documents, An Dong Investment Group Corporation or Tan
Hoang Minh Group.

2. What is the difference between Bonds and Bond Investment Contracts?

Bonds are debt securities issued by governments or corporations to raise
money. When you buy a bond, you are lending money to the issuer in
exchange for a fixed interest rate and a promise to repay the principal amount
on a specific date. Bonds are generally considered to be less risky than stocks,
as bondholders are paid back before shareholders in the event of bankruptcy.
Bond investment contracts are financial instruments that allow investors
to gain exposure to bonds without having to purchase them directly. These
contracts can be traded on exchanges and can be used to speculate on bond
prices or to hedge against interest rate risk.
Here is a table that summarizes the key differences between bonds and
bond investment contracts:
Feature Bonds Bond investment
contracts
Underlying asset Bonds issued by Bonds
governments or
corporations
Risk Generally considered to Riskier than bonds
be less risky than stocks
Liquidity Can be traded in the More liquid than bonds
secondary market, but
liquidity may vary
Cost Can be purchased for May involve fees and
face value or at a commissions
premium or discount

3. Between bonds and bond investment contracts, which one do you think
has more risk? Why?
Bond investment contracts generally have more risk than bonds. This is
because bond investment contracts are derivatives, meaning that they derive
their value from the underlying asset, which in this case is bonds. Derivatives
are typically more complex and riskier than the underlying asset itself.
Here are some of the reasons why bond investment contracts may be
more risky than bonds:
 Leverage: Bond investment contracts often involve leverage, which means
that investors can control a larger position than they could with the same
amount of money if they were investing directly in bonds. This can amplify
both profits and losses.
 Complexity: Bond investment contracts can be complex and difficult to
understand. This can make it difficult for investors to assess the risks
involved.
 Counterparty risk: Bond investment contracts are typically traded
over-the-counter, which means that they are not subject to the same
regulations as exchange-traded securities. This can increase the risk of
default by the counterparty.
In addition to these general risks, there are also specific risks associated
with different types of bond investment contracts. For example, bond futures
contracts have the risk of margin calls, while bond options contracts have the
risk of expiration.

4. In your opinion, is a bond investment contract similar to a "collateralized

debt obligation" (Collateralized Debt Obligation - CDO, or Collateralized
Bond Obligation - CBO, a popular form of warrant during the 2008 crisis).
Please explain.
A bond investment contract is similar to a collateralized debt obligation
(CDO) in that they both allow investors to gain exposure to a pool of
underlying assets, such as bonds. However, there are also some important
differences between the two.
CDOs are typically more complex and structured than bond investment
contracts. CDOs involve pooling together a variety of different types of debt
obligations, each with its own unique risk profile. Bond investment contracts,
on the other hand, can be more straightforward, such as a contract to buy or
sell a specific type of bond.
CDOs are typically traded over-the-counter, while bond investment
contracts can be traded on exchanges. This means that CDOs are less
transparent and liquid than bond investment contracts. During the 2008
financial crisis, CDOs played a major role in the subprime mortgage crisis. This
is because many CDOs were backed by pools of subprime mortgages, which
are mortgages made to borrowers with poor credit history. Bond investment
contracts, on the other hand, were not as heavily involved in the subprime
mortgage crisis.
Overall, bond investment contracts can be a good way for investors to gain
exposure to a pool of bonds, but it is important to understand the risks
involved before investing.

5. After researching, try to answer the question Why is direct finance only
(and should only be) for professional investors or institutional investors?
Direct finance is only for professional investors or institutional investors
because it is complex, risky, and requires a high level of expertise and
understanding of the financial markets. Direct finance involves investing
directly in companies or projects by purchasing securities such as bonds,
shares, or loans. This can be done through a variety of channels, including
private placements, initial public offerings (IPOs), and crowdfunding.
Direct finance offers a number of advantages over traditional forms of
financing, such as bank loans. It can be a more efficient way to raise capital,
and it can give investors access to a wider range of investment opportunities.
However, it is also much riskier than traditional forms of financing, and it is
important to understand the risks involved before investing.
Here are some of the reasons why direct finance is only for professional
investors or institutional investors:
 Complexity: Direct finance can be complex and difficult to understand.
Investors need to have a good understanding of the financial markets, the
risks involved, and the specific investment opportunity they are
considering.
 Risk: Direct finance is a risky type of investment. Investors can lose all of
their investment if the company or project they invest in fails.
 Expertise: Direct finance requires a high level of expertise and knowledge.
Investors need to be able to evaluate investment opportunities, conduct
due diligence, and negotiate terms.
Professional investors and institutional investors have the expertise,
knowledge, and resources to manage the risks involved in direct finance. They
also have the ability to diversify their portfolios and invest in a wider range of
opportunities.
Individual investors who are considering direct finance should carefully
consider their risk tolerance and investment goals. They should also seek
professional advice before making any investment decisions.