Most bonds have a fixed coupon. This means that they have a constant interest rate and a constant interest income until maturity. Interest is usually paid annually.

The interest rate for this type of bond is determined by the issuer after each interest period. The interest rate is usually based on certain reference interest rates at which banks invest funds at short notice with other banks. The formation options for variable-rate bonds are very wide. However, you can specify upper and lower limits for the interest rate. Investors should obtain precise information about the interest rate before buying bonds with variable interest rates.

Convertible bonds and bonds with warrants may be issued by stock corporations. Both are fixed-interest securities that give investors the right to exchange them for shares or exercise their options. In the case of convertible bonds, the holders can exchange their bonds for shares in the company during the term of the bond. If the conversion right is exercised, the bond expires. Option bonds are interest-bearing securities that give the investor the right to acquire shares or other fungible (tradable) assets in a warrant that can be separated from the bond. Once issued, the option can be traded separately from the bond. Option and convertible bonds are an inexpensive way for companies to raise capital. Issuers reduce the market interest they would normally have to pay their investors. In return, they sweeten the lower (interest) income with the right to buy the company's share at a predetermined price.
Unterforen: Additional Tier 1 Bonds (AT1s)

This category includes all bonds not issued in euro, whether issued by public or private issuers. Both bonds in leading currencies such as the US dollar or pound and, for example, the South African rand belong in this category. The attraction of foreign currency bonds lies in the possibility of higher interest rates compared with the euro zone and in the chance of a exchange rate gain. However, there is also the risk of a exchange rate loss against the euro.

In the case of inflation-linked bonds, the coupon and redemption amount are linked to inflation. This protects them (in part) from inflation. Price indices are regarded as the benchmark index. In the case of inflation-linked government bonds, this is the harmonised consumer price index (HICP) excluding tobacco. The HICP measures the price level of goods and services paid by households in the euro area. The so-called index ratio is used to calculate the inflation-dependent coupon and the redemption. This is the ratio between the value of the Benchmark Index on the settlement date and its level at the time the bond was issued. If inflation rises, this has a positive effect on interest rates and the amount at the end of the term. In the case of low inflation or even deflation, however, interest income is lower than for conventional bonds. The federal inflation-linked bonds are repaid at face value in the event of deflation.

The bond type has a lower interest coupon, but these bonds are issued below the nominal value. Investors usually invest in these bonds for tax reasons.

Profit participation certificates are non-standardized securities and represent a hybrid form between shares and bonds. Profit participation capital belongs to the liable equity capital of a company; however, in contrast to shareholders, holders of profit participation certificates do not have voting rights. On the other hand, these securities securitize creditor rights and holders of the certificates receive interest on their capital – higher than with a classic corporate bond. The distribution is usually linked to the economic situation of the company. After a good financial year, the payout can be increased; in bad times, it can be completely cancelled in the worst case. In the case of listed companies, the shareholders decide on the amount of the distribution at the Annual General Meeting. Since the structure of this class of securities is not prescribed by law or the stock exchanges, there are many different forms of participation certificates.

Fixed-income securities also include structured bonds. On the surface, they function like a normal bond with a fixed interest rate. However, structured bonds have individual additional conditions. This can affect the interest conditions, i.e. the coupon increases or decreases in fixed steps or the bond changes into a floater after a certain period of time. However, special repayment conditions also make a fixed-interest security a structured bond, as is the case with credit-linked notes. In this type of security, the issuer securitises a loan it has granted to a third company. If this debtor defaults, the bond owner is liable for the outstanding loan in the amount of his bond. Investors should obtain very detailed information about the interest and redemption terms of the structured bond.

Subordinated bonds, also known as TIER1 bonds, are usually offered by banks. Subordinated means that if the issuer defaults, all other liabilities of the bank are first satisfied before the bond holders receive their money. Classic TIER1 bonds have an infinite maturity. The issuer pays interest on the bond only if the bank also pays a dividend. Because of the higher risk, the interest rates are higher than for comparable senior bonds. There are now also subordinated corporate bonds. TIER stands for the English term level, the term TIER1 comes from logistics.

In the case of zero coupon bonds, investors do not receive fixed interest payments. In return, zero-coupon bonds are issued well below their nominal value. At maturity, they are redeemed by the issuer at nominal value. The income is calculated from the difference between the issue price and the nominal value. This means that the total return is accrued once at the end of the term. Zero coupon bonds are allocated to the category 'Other bonds' on the Frankfurt Stock Exchange.