In general, a bond prospectus refers to the additional data associated with the bond issue. This information primarily concerns interest payments, call provisions, credit quality, and time to maturity – which constitute essential knowledge for investors (Jark, 2021). At the same time, a bond prospectus might also include general information about the company, price projections, and repayment funds (Jark, 2021). Furthermore, there are two separate types of documents: preliminary prospectus and final prospectus, and the former is generally presented to investors (Jark, 2021). Ultimately, a bond prospectus is a complex document that contains a large number of financial information about a specific bond issue.
However, the data demonstrated in the bond prospectus might significantly affect the yield of a bond issue; therefore, it is essential to understand the primary components of the document. Bond yield is the overall financial return, which is realized upon a bond (Hayes, 2021). The most significant financial information, which might affect the bond yield, is the interest payment (Jark, 2021). The entry in the bond prospectus commonly concerns the timing and conditions of the coupon payment of the bond issue and, therefore, directly affects the bond yield (Jark, 2021). The bond prospectus might also include the details concerning the interest payment schedule; however, it is not a necessary requirement for the document (Jark, 2021). The information regarding the interest payment is the most defining entry for the bond yield. The date of maturity, credit rating, and other features might also have an impact on the bond yield (Jark, 2021). For instance, longer maturity bonds are generally associated with a higher bond yield; however, the mentioned factors are generally less important than the interest payment data.
References
Hayes, A. (2021). Bond yield.
Jark, D. (2021). Corporate bond prospectus features.