INVESTMENT MANAGEMENT

AICM Amulya H L, Lathesh C R

FUNDAMENTAL ANALYSIS
Fundamental analysis (FA) is a method of measuring a security's intrinsic value by examining related economic
and financial factors.

Fundamental analysis is really a logical and systematic approach to estimating the future dividends and share price
it is based on the basic premise that share price is determined by a number of fundamental factors relating to the
economy, industry and company. In other words, fundamental analysis means a detailed analysis of the
fundamental factors affecting the performance of companies.

Intrinsic Value
One of the primary assumptions of fundamental analysis is that the current price from the stock market often does
not fully reflect the value of the company supported by the publicly available data.

However, rather than its book value or market price, intrinsic value is what a security or company is truly worth.
Intrinsic value considers a number of elements such as trademarks, copyrights, the quality of the directors, the
business climate, and brand identity - aspects that are difficult to assess and are not always fully reflected in market
price.

WHY FUNDAMENTAL ANALYSIS?

Fundamental analysis answers the following questions:

1. Is the company's revenue growing?
2. Is it actually making a profit?
3. Is it in a position strong-enough to outrun its competitors in the future?
4. Is it able to repay its debts?
5. Is management trying to "cook the books

EIC Analysis
Economic Industry Analysis A traditional technique to security selection. EIC stands for economic, industry, and
company. EIC analysis of a company based on these three different analyses is required for evaluation.

• Economic Analysis
• Industry Analysis
• Company Analysis

• Economic Analysis
The performance of a business is determined by the success of the economy. When the economy is growing,
incomes rise, demand for commodities rises, and industries and businesses in general prosper. On the other side,
if the economy is in a recession, company performance will be generally terrible.

a) Growth Rates of National Income

The rate of growth of the national economy is an important component for an investor to consider. GNP (gross
national product), NNP (net national product), and GDP (gross domestic product) are three different metrics of the

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country's total income or entire economic production. These measurements' growth rates represent
the economy's growth rate.

b) Government Revenue, Expenditure and Deficits

Because the government is the largest investor and spender of money, movements in government revenue,
expenditure, and deficits have a considerable impact on industry and company success. All emerging countries
have budget deficits because governments spend a lot of money to build infrastructure. However, the budget deficit
is a major predictor of inflation since it leads to deficit financing, which fuels inflation.

c) Exchange Rates
School of Distance Education Fundamentals of Investments 101 The performance and profitability of industries
and businesses that are big importers or exporters are heavily influenced by the rupee's exchange rate against the
world's major currencies.

d) Infrastructure

The development of an economy is heavily reliant on the available infrastructure. Industry requires power to
operate, roads and trains to move raw materials and completed goods, and communication routes to stay in touch
with suppliers and customers.

e) Climate change

The Indian economy is fundamentally an agrarian economy, with agriculture playing a critical role. Because of the
significant forward and backward links between agriculture and industry, the performance of various industries
and businesses is dependent on agriculture's performance. Furthermore, as farm incomes rise, so will demand for
industrial products and services, and industry will thrive.

g) Inflation

The level of inflation in the economy has a significant impact on the success of businesses. Inflationary pressures
disrupt corporate strategies, cause cost increases, and reduce profit margins. Inflation, on the other hand, causes
customers' purchasing power to erode. As a result, product demand will fall. Thus, excessive rates of inflation in
an economy are likely to have a negative impact on company performance. During periods of low inflation,
industries and businesses thrive

h) Interest rate

f) Economic Stability and Political environment

• Industry Analysis
An Industry is generally described as a homogenous group of companies or group of firms producing reasonably
similar products which serves the same needs of common set of buyers.

An industry is a group of firms that have similar technological structure of production and produce similar products.

Industry analysis refers to an evaluation of the relative strengths and weaknesses of particular industries.

Examples
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Food Industries, Beverages, Tobacco and tobacco products, Textiles, Wood and wood products.,
Leather and leather products, Rubber and plastic products, Chemical and chemical products.

Factors to be Considered for industry analysis

a. Growth of the Industry

The industry's previous record in terms of growth and profitability should be examined. The Centre for
Monitoring Indian Economy publishes industry-specific growth data on a regular basis. The diversity in return and
growth in response to macroeconomic events in the past provides insight into the future. Even if history does not
repeat itself exactly, an analyst can forecast the future by studying the industry's historical progress.

b. Nature of the Product

Consumers and other industries require the items manufactured by industries. The demand for industrial items such
as pig iron, iron sheet, and coils is determined by the building sector. Similarly, the textile machine tools business
manufactures tools for the textile industry, and the overall demand is determined by the state of the textile industry.
Several instances can be given. To determine the demand for industrial goods, the investor must examine the state
of the linked goods producing industry as well as the end user industry.

c. The Competition's Nature

The nature of competition is an important aspect in determining the demand for a specific product, its
profitability, and the price of the concerned company's shares. A company's ability to survive both local and
worldwide competition is critical. If there are too many enterprises in the organised sector, School of Distance
Education Fundamentals of Investments 107 competition will be fierce. The price of the product would fall as a
result of the competition. Before investing in a company's stock, the investor should research the market share of
the company's product and compare it to the top five firms.

d. policy of the Government

Government policies have an impact on the very heart of the sector, and the impacts vary per industry. Tax
breaks and exemptions are available for export-oriented products. The government governs the size of
manufacturing as well as the pricing of specific products. Inconsistent government policies frequently have an
impact on the sugar, fertiliser, and pharmaceutical industries. Sugar price control and decontrol have an impact on
the sugar industry's profitability. The government may erect entry barriers in specific situations.

e. Development and Research

To compete in national and worldwide markets, each industry's product and manufacturing process must be
technically competitive. This is determined by the company's or industry's R&D. Only via R&D can economies of
scale and new markets be gained. Before making an investment, the percentage of R&D expenditure should be
thoroughly researched.

f. Pollution Regulations

In the industrial sector, pollution requirements are extremely rigorous and stringent. It may be heavier in some
industries than others; for example, industrial effluents are higher in the leather, chemical, and pharmaceutical
industries. The above considerations of industry structure should be analysed by the investor to estimate the future
trends of the industry in light of the economic conditions. When a potential industry is identified then comes the
final step of EIC analysis which is narrower relating to companies only.

g. Labour
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The examination of the labour scenario in a specific industry is critical. The number of trade unions
and their working method have an impact on labour productivity and industrial modernization. The
textile industry is well-known for its strong labour unions. If trade unions are powerful and strikes occur regularly,
production will suffer. In an industry with large fixed costs, a production halt may result in a loss. When trade
unions reject the deployment of automation, the corporation may lose market share due to high production costs.
Customers' goodwill is also lost as a result of an uncomfortable labour relationship.

h. Cost Structure and Profitability

The cost structure, which includes fixed and variable costs, influences the firm's production costs and profitability.
The fixed cost portion of the oil and natural gas business, as well as the iron and steel industry, is large, and the
gestation time is also School of Distance Education Fundamentals of Investments 106 long. The greater the fixed
cost component, the greater the required sales volume to reach the firm's breakeven point. Once the breakeven
point has been reached and production is on schedule, profitability can be raised by fully utilising the capacity.
Once the maximum capacity is reached, capital must be invested in fixed equipment once more. As a result,
lowering fixed costs, adaptability to shifting demand, and attaining break even points are significantly easy.

• Company Analysis
Company analysis deals with return and risk of individual share and security. The analyst tries to forecast the
future earnings which has direct effect on share price.

In company analysis, different companies are considered and evaluated from the selected industry so that the most
attractive company can be identified. Company analysis is also referred to as security analysis in which stock
picking activity is done.

well-being. They clearly include income and profit, but they can also cover anything from a company's market
share to its managerial competence. The various fundamental factors can be grouped into two categories:
quantitative and qualitative.

• Qualitative – "relating to the nature or standard of something, rather than to its quantity."

• Quantitative – "related to information that can be shown in numbers and amounts."

Qualitative Fundamentals

a. The business model:

The first and most important thing an investor should do before starting any study is to understand what the firm
performs to generate income. A business model specifies the company's revenue generation strategy, products and
services, and target market in order to retain profitability.

b. Competitive advantage:

Typically, investors should prefer to invest in companies that have developed competitive advantages for
themselves in terms of cost advantage, quality, brand, distribution network, and so on. This assists the corporation
in creating an economic moat around the business, allowing it to keep competitors at bay while enjoying longevity,
growth, profits, and market share dominance.

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c. Management:

Sound management with high credibility always works for the benefit of the company and its people while also
creating profit for the shareholders. As a result, it is always in the best interests of the shareholders to be identified
with trustworthy and competent management rather than with management whose reputation is questioned.

d. Corporate Governance:

This is the set of rules, policies, and processes that command-and-control enterprises while also balancing the
interests of management, directors, and stakeholders. Investors should always put their money into companies that
are conducted ethically, fairly, honestly, and efficiently, and whose management respects the rights and interests
of its shareholders. They should make certain that any communications they receive are clear, transparent, and
intelligible. They should avoid companies that do not engage in such procedures or are under the scrutiny of SEBI
or the government as a result of any misappropriation, for example. To have a thorough understanding of the
company's governance, should read the Corporate Governance Report (included in the Annual Report) as well as
the Auditors Report.

Quantitative Fundamentals:

a. Financial Statements:

Financial statements are the medium by which a company discloses information concerning its financial
performance. Followers of fundamental analysis use quantitative information gleaned from financial statements to
make investment decisions. The three most important financial statements are income statements, balance sheets,
and cash flow statements.

b. The Balance Sheet

This statement summarises a company's assets, liabilities, and equity at a specific point in time. It displays investors
a company's financial structure, stating what it owns and owes and so assisting in determining a company's true
worth. Investors can gauge a company's growth by examining its balance sheet over time. It aids in understanding
a company's worth by examining factors such as equity, debt, liquidity, asset base, and working capital position,
among others.

c. The Income Statement

While the balance sheet examines a corporation in a single snapshot, the income statement assesses a company's
success over a certain time period. Technically, a balance sheet might be for a month or even a day, but public
corporations only report quarterly and annually. The income statement summarises the sales, expenses, and profit
generated by the company's operations during that time period.

d. Statement of Cash Flows

This is a critical financial statement since it reveals a company's genuine cash or liquidity status. It gives
information on cash inflows and outflows over a given time period. Because it is impossible to falsify a company's
cash position, it is employed as a concrete indicator of a company's performance. The following cash-related
activities are highlighted in the statement:

Some of the widely used fundamental analysis tools are:

1. Earnings per share or EPS

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2. Price-to-earnings (P/E) ratio
3. Return on equity
4. Price-to-book (P/B) ratio
5. Beta
6. Price-to-sales ratio
7. Dividend payout ratio
8. Dividend yield ratio

GLOBAL ECONOMY
The global economy refers to the interconnected worldwide economic activities that take place between multiple
countries. These economic activities can have either a positive or negative impact on the countries involved.

Global economy signifies the interdependence of nations in terms of the production, exchange, and consumption
of goods and services. In this multifaceted system, countries engage in a complex dance of imports and exports,
shaping the dynamics of supply and demand on a global scale.

Characteristics of Global Economy

a) Globalisation

b) international trade

c) international finance

d) Global investment

a) Globalisation

Globalisation describes a process by which national and regional economies, societies, and cultures have become
integrated through the global network of trade, communication, immigration, and transportation. These
developments led to the advent of the global economy. Due to the global economy and globalisation, domestic
economies have become cohesive, leading to an improvement in their performances.

b) International trade

International trade is considered to be an impact of globalisation. It refers to the exchange of goods and services
between different countries, and it has also helped countries to specialise in products which they have a comparative
advantage in. This is an economic theory that refers to an economy's ability to produce goods and services at a
lower opportunity cost than its trade partners.

c) International Finance

Money can be transferred at a faster rate between countries compared to goods, services, and people; making
international finance one of the primary features of a global economy. International finance consists of topics like
currency exchange rates and monetary policy.

d) Global Investment

This refers to an investment strategy that is not constrained by geographical boundaries. Global investment mainly
takes place via foreign direct investment (FDI
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Benefits of Global Economy

1. Increased choice
2. Higher quality goods
3. Increased competition
4. Economies of scale
5. Increased capital flows
6. Increased labour mobility
7. Improved international relations

1. Increased choice

No individual country could produce the sheer variety of goods that can be produced globally. Through
globalization, consumers in one country can have access to goods and services that they would never otherwise
have access to.

2. Higher quality goods

As each nation concentrates on its own specialty industries, there is far less 're-inventing the wheel', For example,
every country does not need to waste its scarce resources producing its own version of the smartphone when one
can be imported from a country that specializes in this product.

3. Increased competition

The presence of increased competition in a country's economy from foreign companies means a more efficient
market and lower prices for consumers. Suppliers of goods and services need to keep their prices low to stay
competitive.

4. Economies of scale

As globalization provides companies with a much bigger effective market in which to sell their goods, they can
scale up their production. As the level of production increases, their margin on each good or service provided can
increase as their fixed costs remain the same, or become incrementally smaller.

5. Increased capital flows

Capital is able to flow into developing economies providing a significant form of finance that businesses in that
economy would not otherwise have access to.

6. Increased labour mobility

By allowing individual workers to move to other countries, the global economy can better match supply and
demand. Countries that are excellent in educating certain professionals can export those professionals to other
countries which do not have the same specialty. For example, New Zealand must import a significant number of
skilled agricultural workers every year to harvest its crops.

7. Improved international relations

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Countries that have a positive trade relationship with each other, have an incentive not to get into
conflict. On a global scale, this should reduce the likelihood of armed conflict between countries.

DISADVANATGES OF GLOBAL ECONOMY

1. Possible monopolization of multi-national companies

Large enterprises from developed countries may move into smaller developing nations and take over the market.
Their specialization and efficiency in providing a particular good or service may mean that local producers in a
developing country are knocked out of the market

2. Structural unemployment

If a country is no longer competitive in the production of a particular good, this may mean that its production
rapidly moves offshore, and workers are left unemployed. While it may be possible to re-train these staff and
deploy them to a more efficient market, this lag can take years, resulting in a significant rise in unemployment and
inequality;

3. Inter-dependence

Individual countries become dependent on other nations for their supply chains. If there is a disruption to this chain,
they may no longer be able to produce the good themselves.

4. Tax avoidance

It may be that some companies are able to avoid paying taxes that one might expect that company to pay in a given
country through legal tax arrangements.

It is worth emphasizing that all these potential disadvantages are ones that apply to the economy as a whole, they
are not costs for individual businesses.

DOMESTIC ECONOMY
The domestic economy refers to the economic activities that take place within the borders of a specific country,
encapsulating all production, consumption, and exchange of goods and services occurring internally. This concept
is fundamental to understanding a nation's economic health and performance. The domestic economy is often
measured by indicators such as gross domestic product (GDP), unemployment rates, and inflation, providing a
snapshot of the overall economic well-being of a country.

ADVANTAGES OF DOMESTIC ECONOMY

1. Economic Self-Sufficiency

A strong domestic economy promotes economic self-sufficiency, reducing reliance on external sources for
essential goods and services. This autonomy can enhance a nation's resilience to global economic fluctuations and
geopolitical uncertainties. By fostering self- sufficiency, a domestic economy can better withstand external shocks,
ensuring a more stable economic foundation.

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2. Job Creation and Employment

The focus on domestic economic activities contributes to job creation within the country. As industries and
businesses thrive domestically, they generate employment opportunities for the local workforce. A robust job
market enhances the standard of living, reduces poverty, and fosters social stability, creating a positive feedback
loop for economic development.

3. Control over Economic Policies

A domestic economy provides policymakers with greater control over economic policies. Governments can
implement targeted fiscal and monetary measures to address specific challenges or stimulate growth. This control
allows for more effective responses to economic conditions, fostering stability and sustainability in the long run.

4. Tailoring Regulations to Local Needs

Domestic economic policies and regulations can be tailored to meet the specific needs and challenges of the local
population. This flexibility enables the implementation of measures that support small and medium-sized
enterprises (SMEs), encourage innovation, and address social and environmental concerns unique to the country.

5. Strengthening National Identity

A flourishing domestic economy contributes to the overall national identity and pride. When citizens witness the
success of local industries and businesses, it fosters a sense of community and shared prosperity. This can have
positive social and cultural impacts, creating a strong series of belonging and commitment to the nation's economic
well-being.

6. Strategic Resource Management

A focus on the domestic economy allows for strategic resource management. Nations can prioritize the sustainable
utilization of their natural resources, ensuring long-term environmental and economic sustainability. This approach
helps guard against resource depletion and promotes responsible stewardship of the nation's assets.

DISADVANTAGES OF DOMESTIC ECONOMY

1. Limited Market Access and Competition

A purely domestic economy may limit market access for businesses, reducing their exposure to international
markets. This can hinder competitiveness and innovation as businesses may lack exposure to diverse consumer
demands and global best practices. Limited competition within a domestic market might lead to complacency
among businesses, potentially impacting the quality and variety of goods and services available to consumers.

2. Vulnerability to Economic Shocks

Relying solely on a domestic economy makes a nation more susceptible to internal economic shocks. Factors such
as natural disasters, political instability, or economic downturns can have a more significant and immediate impact
when the economy is not diversified across international markets. This vulnerability may result in increased
economic volatility and challenges in maintaining a stable economic environment.

3. Missed Opportunities for Specialization

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A domestic focus may lead to missed opportunities for specialization. International trade allows
countries to capitalize on their comparative advantages by specializing in the production of certain
goods and services. A purely domestic orientation could prevent a country from fully leveraging its unique
strengths, potentially limiting economic growth and efficiency.

4. Reduced Innovation and Technological Exchange

A closed domestic economy may experience a slower pace of innovation and technological advancement. Exposure
to global markets facilitates the exchange of ideas, technologies, and best practices, fostering an environment
conducive to innovation. Restricting this exchange could stifle technological progress, hindering a nation's ability
to remain competitive in an increasingly globalized world.

5. Risk of Protectionism

A focus on the domestic economy may lead to protectionist policies, such as tariffs and trade barriers, aimed at
shielding domestic industries from international competition. While these measures may initially protect local
businesses, they can result in higher costs for consumers, reduced product diversity, and strained international
relations. Protectionism may also invite retaliation from trading partners, triggering trade conflicts are grow Orden
lop.

6. Potential for Economic Stagnation

Overreliance on a domestic economy might lead to economic stagnation over time. Exposure to international
markets stimulates economic growth by fostering competition,

encouraging efficiency, and providing avenues for expansion. Without this external stimulus, a domestic economy
may struggle to achieve sustained growth and development.

Meaning of Trade Cycle

A business cycle refers to fluctuations in economic activities specially in employment, output and income, prices,
profits etc. It has been defined differently by different economists.

Definition

“A trade cycle is composed of periods of good trade characterised by rising prices and low unemployment
percentages altering with periods of bad trade characterised by falling prices and high unemployment percentages”.
- J.M. Keynes

A trade cycle is composed of periods of Good Trade, characterized by rising prices and low unemployment
percentages, shifting with periods of bad trade characterized by falling prices and high unemployment percentages.

Features of Trade Cycle

The characteristics or features of the trade cycle are

1. Movement in Economic Activity: A trade cycle is a wave-like movement in economic activity showing
an upward trend and a downward trend in the economy.
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2. Periodical: Trade cycles occur periodically but they do not show the same regularity.
3. Different Phases: Trade cycles have different phases such as Prosperity, Recession, Depression and
Recovery.
4. Different Types: There are minor and major trade cycles. Minor trade cycles operate for 3-4 years, while
major trade cycles operate for 4-8 years or more. Though trade cycles differ in timing, they have a common
pattern of sequential phases.
5. Duration: The duration of trade cycles may vary from a minimum of 2 years to a maximum of 12 years.
6. Dynamic: Business cycles cause changes in all sectors of the economy. Fluctuations occur not only in
production and income but also in other variables like employment, investment, consumption, rate of
interest, price level, etc.
7. Phases are Cumulative: Expansion and contraction in a trade cycle are cumulative, in effect, i.e. increasing
or decreasing progressively.
8. Uncertainty to businessmen: There is uncertainty in the economy, especially for the businessmen as
profits fluctuate more than any other type of income.
9. International Nature: Trade Cycles are international in character.

Phases of Trade Cycle

Expansion
Expansion is the first phase of a business cycle. It is often referred to as the growth phase.
In the expansion phase, there is an increase in various economic factors, such as production, employment,
output, wages, profits, demand and supply of products, and sales. During this phase, the focus of
organisations remains on increasing the demand for their products/services in the market.

The expansion phase is characterised by:

• Increase in demand
• Growth in income
• Rise in competition
• Rise in advertising
• Creation of new policies
• Development of brand loyalty
In this phase, debtors are generally in a good financial condition to repay their debts; therefore, creditors
lend money at higher interest rates. This leads to an increase in the flow of money.

In the expansion phase, due to increase in investment opportunities, idle funds of organisations or
individuals are utilised for various investment purposes. The expansion phase continues till economic
conditions are favourable.

Peak

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Peak is the next phase after expansion. In this phase, a business reaches at the highest level and the
profits are stable. Moreover, organisations make plans for further expansion.

Peak phase is marked by the following

features:

• High demand and supply

• High revenue and market
share
• Reduced advertising
• Strong brand image
In the peak phase, the economic factors,
such as production, profit, sales, and
employment, are higher but do not
increase further.

Recession
An organisation after being at the peak for a period of time begins to decline and enters the phase of contraction.
This phase is also known as a recession.
An organisation can be in this phase due to various reasons, such as a change in government policies, rise in the
level of competition, unfavourable economic conditions, and labour problems. Due to these problems, the
organisation begins to experience a loss of market share.

The important features of the contraction phase are:

• Reduced demand
• Loss in sales and revenue
• Reduced market share
• Increased competition

Trough
In Trough phase, an organisation suffers heavy losses and falls at the lowest point. At this stage, both profits and
demand reduce. The organisation also loses its competitive position.

The main features of this phase are:

• Lowest income
• Loss of customers
• Adoption of measures for cost-cutting and reduction
• Heavy fall in market share
In this phase, the growth rate of an economy becomes negative. In addition, in trough phase, there is a rapid decline
in national income and expenditure.

VALUATION
Valuation is the process of determining the current worth of an asset or company.

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There are many techniques that can be used to determine value, some are subjective and others are
objective. Judging the contributions of a company's management would be more of a subjective
valuation technique, while calculating intrinsic value based on future earnings would be an objective technique.

Valuation of Bonds
A bond is a long-term debt instrument or security. It is issued by business enterprises or government agencies to
raise long-term capital. A bond usually carries a fixed rate of interest. It is called as coupon payment and the interest
rate is called as the coupon rate. The coupon payment can be either annually or semi-annually

Valuation of bond refers to a technique for determining the fair value of a particular bond.

Bond valuation includes calculating the present value of the bond's future interest payments, also known as its cash
flow and the bond's value upon maturity also known as its face value or par value.

Bonds are of two types,

a) Redeemable bonds.

b) Irredeemable bonds.

A bond can be irredeemable or redeemable. Redeemable bonds have a fixed maturity date and irredeemable bonds
have perpetual life with only interest payments periodically.

Characteristics of Bond
Understanding the essential characteristics of bonds is vital to appreciate their function in an investment portfolio.

Face Value/Par Value

The face value, or par value, is the amount the bond issuer promises to repay the bondholder upon maturity.

Coupon Rate

The coupon rate is the interest that the bond issuer pays the bondholder. It's usually a fixed percentage of the face
value. This payment could be semi-annual, quarterly, or annually depending on the bond's terms.

Maturity Date

The maturity date is when the bond issuer must repay the bond's face value to the bondholder. Maturities can range
from one to 30 years, but most bonds typically have a maturity period between 20 and 30 years.

Issuer

The issuer of the bond is the entity that borrows the funds. It could be a government, a municipality, or a
corporation.

Duration of Bond

Bond duration measures the sensitivity of a bond’s price to the variations in rate of interest. This does not represent
the time length till the date of maturity.

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Different Types of Bonds

• Traditional Bond: A bond in which the entire principal can be withdrawn at a single time after the bond’s
maturity date is over is called a Traditional Bond.
• Callable Bond: When the issuer of the bond calls out his right to redeem the bond even before it reaches
its maturity is called a Callable Bond. Through this type of bonds, the issuer can convert a high debt bond
into a low debt bond.
• Fixed-Rate Bonds: When the coupon rate remains the same through the course of the investment, it is
called Fixed-rate bonds.
• Floating Rate Bonds: When the coupon rate keeps fluctuating during the course of an investment, it is
called a floating rate bond.
• Puttable Bond: When the investor decides to sell their bond and get their money back before the maturity
date, such type of bond is called a Puttable bond.
• Mortgage Bond: The bonds which are backed up by the real estate companies and equipment are called
mortgage bonds.
• Zero-Coupon Bond: When the coupon rate is zero and the issuer is only applicable to repay the principal
amount to the investor, such type of bonds are called zero-coupon bonds.
• Serial Bond: When the issuer continues to pay back the loan amount to the investor every year in small
instalments to reduce the final debt, such type of bond is called a Serial Bond.
• Extendable Bonds: The bonds which allow the Investor to extend the maturity period of the bond are
called Extendable Bonds.
• Corporate Bonds: Corporate bonds are fixed-income securities issued by corporations to finance
operations or expansions.
• International Government Bonds: International government bonds are debt securities issued by foreign
governments. They allow investors to diversify their portfolios geographically and potentially benefit from
currency fluctuations or higher yields
• Municipal Bonds: Municipal bonds (called “Munis”) are debt securities issued by states, cities, or
counties to fund public projects or operations

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