OverviewofwhatisabondandwhytOverviewofwhatisabondandwhytheyareseenAbondisalongtermdebtsecurity.Itrepresentsdebtbecausetheinvestorsac-tuallylendthefaceamounttothebondis-suer.However，unlikeloans，bondscanbetradedintheopenmarket，ie.theinvestorneednotholdittomaturityorsufferape-naltyshouldhechoosetosellthebond.Atypicalbond(plainvanilla)specifies:-theamountoftheloan.Thefacea-mountorparvalueistheamountthatthebondissuerhasagreedtorepay.AtypicalfaceamountisS$1，000forbondsissuedbytheSingaporegovernment;-afixeddatewhentheprincipalisdue.Thedateonwhichtheprincipalisrequiredtoberepaidiscalledthematuritydate;-ifthebondissecuredbyacollateral.InvestorsoftheOrchard300bondissuedbyHallgadenInvestmentPteLtd(ajointventurebetweenSingaporePressHoldingsandLumChang)havethefirstlegalmort-gagerightstoThePromenade，acommer-cialpropertyattheheartofOrchardRoad.-Thecontractualamountofinterestwhichispaidouteithereverysixmonthsorannually.Thecouponrateisdeter-minedlargelybymarketconditionsatthetimeofthebond'ssale.Oncedetermined，itissetcontractuallyforthelifeofthebonds.However，somebondshaveinterestratesthatfluctuateduringthelifeofthebond，usuallyataspreadoverareferencerate.Thesearecalledvariableratebondsorfloatingratenotes(FRN).OneexampleofafixedratebondistheSingaporeGovernmentBond4.5%03/00，theissueristheGovernmentofSingapore，theinterestpayableis4.5%.TheSGB'scouponispayableonasemi-annualbasis，i.e.theSingaporeGovernmentwillpaytheinvestor2.25%ofS$1，000or$22.40everysixmonths.ThegovernmentpromisestorepaytheprincipalinMarch2000totheinvestor.Ontheotherhand，theDBSLand4/00FRNpaysacouponof35basispointsoverthe6monthsSingaporedollarswaprate，wherethereferencerateisfixedeverysixmonthsandtheprincipalisdueonApril2000.Priortotheearly1980s，thebondmarketwascomprisedmainlyof'plainvanilla'bondswithsimplecashflowstructures，wherecouponpaymentsandmaturitywerefixedattheoutset.Butsincethen，themarkethasprogressed，andmanysecuritiesinthebondmarkethaveoptionsembeddedinthem.Examplesincludesecuritiessuchas"callablebonds"and"puttabl