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The securities offered in TD have different characteristics and can be indexed to price indices, Selic or fixed rate securities. In addition, they can make semi-annual payments (coupons) or not.
Titles can be prefixed or postfixed.
Prefixed: The rate of return is predetermined at the time of purchase. It is given by the difference between the purchase price and the price at the time of expiration. The flow is not corrected by any indexer.
Postfix: The title value is corrected by its indexer. Thus, bond yield depends on both the performance of its index and the discount paid at the time of purchase (real interest rate or premium).
The interest rate indicated for the securities may be nominal, real or a premium on the indexer.
Nominal: The reported interest rate for these securities does not consider the effect of inflation on the security value.
Real: The reported rate reflects the return above inflation at which the security will be remunerated.
Premium: The index of some securities may not be linked to inflation. This is the case of LFT which has a negative goodwill that gives the investor an additional gain on the Selic correction.
As some titles are indexed, VNA (Updated Nominal Value) was created.
VNA: VNA facilitates tracking of the evolution of indexers. In their base dates, the VNA had a value of R $ 1,000.00. Since then, they have been updated as their indexers evolve. Thus, the variation of the VNA between two dates indicates which variation of the indexer to which it refers.
Base Date: Indicates the start date of the VNA update.
Some bonds make periodic payments (coupons) throughout their existence.
Coupon: These are payments made over the life of the securities. They are usually paid semi-annually. Its value is calculated as the percentage of each security (eg NTN-B is 6.00% per annum, or 2.96% per semester) times the NAV calculated for that date. Coupon payment dates are retroactive to expiration. Thus, for an NTN-B due on 8/15/2006, the coupons will be paid on 8/15/2006, 2/15/2006, 8/15/2005 and so on.
Bullet: Title that does not pay coupon. The only amount paid is the principal amount on the due date (usually $ 1,000 or $ 1,000 corrected by VNA).
The nominal rate is the apparent rate. It consists of a monetary portion (inflation correction) and a real portion.
Monetary: Represents the correction of inflation, ie, it is the replacement of the investor's loss of purchasing power.
Real: Represents interest above inflation. Thus, it is the effective increase of investor purchasing power.
Nominal: It is also called the apparent rate because it is obtained by directly comparing the applied amount and the redemption value, without taking into account the loss of purchasing power generated by inflation. The nominal rate consists of a real and a monetary part. –