Question

Describe the procedure to issuing and marketing bonds to the public, and indicates the factors considered in determining selling price of the bond?

Answer 1

Following is the procedure to issuing and marketing bonds to the public;

1. First of all draft an offering prospectus

2. Collecting required supplemental information

3. Submit all required documents to SEC

4. Get approval from SEC to issue bonds in the market

5. Selection of underwriters

6. Proper pricing of bonds

7. Complete offering proposal in the market

8. Finalize bond issue etc.

Following factors considered in determining selling price of the bond;

1. Consider interest rates of the market

2. Consider normal interest rates of the country tha are being offered to public by central bank

3. Price of the competitive bonds available in market

4. Credit of the bonds in the market

5. Duration of the bonds

6. Demand-supply relationship in the market

7. Future Interest Rate Expectations

8. Conditions of money market

9. Economic conditions etc.