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These are also popular with corporations as they do not necessarily have to commit themselves to pay high interests on long term bonds.
? Zero coupon bonds pay no coupons, but are offered at substantial discounts to the investors and hence provide "capital appreciation (increase in market price of the asset)...
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Such bonds are issued by companies which have cash flow problems, which make them risky.
Step-ups: Step-ups occur when a company's rating is downgraded and it must increase the bond's coupon rate. Step-ups have often led to bankruptcies as it has a negative effect on the reputation of the company.
Maturity Date: The date at which the par value must be paid...
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General points of the essay
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