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Step Coupon Bonds: These are bonds whose coupon rates increase
over the duration of the bond. Often these bonds start by yielding below
what similar bonds do, but end up with a higher than average yield. It
should be noted that many step coupon bonds are callable, and have a
call schedule that mirrors the step coupon rate schedule. In other
words, instead of paying the higher interest rate when it may be due,
the bond issuer has the right to call the bond (return the par value to
the bondholder).
Putable Bonds: These bonds allow the bond holder to redeem them at face value pre-defined intervals. Putable bonds are basically the inverse of callable bonds. Bondholders typically pay a premium for putable bonds, which is another way of saying that the coupon rate on putable bonds is lower because of the buyer is essentially paying for a put option on the bond in addition to the bond itself.
Tax Status: Various bonds have different tax implications. For instance, many government bonds around the world allow interest-income to be tax-free, while corporate bonds are often taxed as ordinary income is (it should be noted that tax rules are subject to the jurisdiction one is in, as well as their own personal situation). When comparing bonds, understanding the tax implications can provide a complete picture on the yield that the bond will actually provide.
Survivor's Option. Survivors option bonds are those that, in the event the bondholder passes away, allows the beneficiary to inherit the bond with the option of redeeming it at par value. Bonds with a survivor's option often have many conditions -- i.e. how jointly held bonds are handled if one bondholder passes away, proof of death and inheritance rights that must be provided, time limits on providing this proof, limits the amount of the survivor's option --- and thus it is paramount for bondholders with survivor's options to read the fine print. Survivor's options are usually of interest to large estates that are handled by professional executors.
Putable Bonds: These bonds allow the bond holder to redeem them at face value pre-defined intervals. Putable bonds are basically the inverse of callable bonds. Bondholders typically pay a premium for putable bonds, which is another way of saying that the coupon rate on putable bonds is lower because of the buyer is essentially paying for a put option on the bond in addition to the bond itself.
Tax Status: Various bonds have different tax implications. For instance, many government bonds around the world allow interest-income to be tax-free, while corporate bonds are often taxed as ordinary income is (it should be noted that tax rules are subject to the jurisdiction one is in, as well as their own personal situation). When comparing bonds, understanding the tax implications can provide a complete picture on the yield that the bond will actually provide.
Survivor's Option. Survivors option bonds are those that, in the event the bondholder passes away, allows the beneficiary to inherit the bond with the option of redeeming it at par value. Bonds with a survivor's option often have many conditions -- i.e. how jointly held bonds are handled if one bondholder passes away, proof of death and inheritance rights that must be provided, time limits on providing this proof, limits the amount of the survivor's option --- and thus it is paramount for bondholders with survivor's options to read the fine print. Survivor's options are usually of interest to large estates that are handled by professional executors.
