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Page 14 THE HERALD Wednesday August 1990 Discount bonds generate income If you re an investor in fixed- Income securities or if you re con becoming one you may wonder if and when it makes sense to buy a bond selling for less than its face value of Discount Bonds are not a special type of bond You almost always have a choice of investing in bond issues at various prices after they have been issued no matter what kind of bond you buy a govern ment corporate or mortgage- backed securities issue can trade at a above or below par value 100 Discount Bonds are simply bonds than can be bought at a pnce lower than par value yet because of their potential special tax conse quences they will appeal to tain types of investors It is impor tant that you understand how these bonds work to be able to determine whether they would be an ap propriate addition to your personal portfolio Bonds trade for more or less than par value because interest rates in the economy as a whole are in a constant state of change As interest rates change the return known as the yield provid ed to investors by previously issued bonds must be constantly revised to remain competitive with new issues carrying current market interest rates Since an older bond interest rate was fixed Brian Slessor Dollars and Sense at the time the bond was issued the only way its yield can be ad justed is to raise or lower its When the pnce falls in response to rising interest rates a discount bond is created Thus a 25year bond issued in when interest rates were much lower than they are today carries only a per cent coupon rate Today new issues of a 23year bond may have a coupon rate as high as per cent To attract in vestors the bonds issued in 1967 must now be offered at a price much lower than par value At maturity in 1992 the investor holding this 25year bond will receive the full face value of no matter what he paid for it The difference between the pur chase and the maturity value will be capital gains for the in provided that the investor is classified as an investor rather than a trader according to Revenue Canada guidelines The interest payments plus the capital gains combine to give the investor a yield competitive with other bonds Because the holder of a discount bond earns the greater portion of from capital gains rather than interest the after tax yield can be more attractive Using cur rent rates as an example provided an investor still has some portion of his capital gains exemption re maining a discount bond yielding per cent would have an after tax yield of approximately per cent where a Guaranteed Invest Certificate with an interest rate of 11 per cent may only have a per cent after tax return assuming a marginal tax bracket of per cent Obviously the higher your tax bracket the greater the benefit of investing in Discount Bonds If you are an in in a high tax bracket you should consider Discount Bonds as a safe way to generate income and at the same time reduce your tax liability Brian is an Investment Executive with outside Toronto call collect OTTAWA Pierre Biais Minister of Consumer and Cor porate Affairs has announced the appointment of Walter Clare as Superintendent of Bankruptcy The appointment takes effect Agriculture Canada backs Grade A eggs OTTAWA The chance of eating a Canada Grad A egg containing Salmonella ententidis in the in terior of the shell is considerably less than one in a million ac cording to recent analysis con ducted by Agriculture Canada This analysis which was based on an extensive survey of dian laying flocks found the prevalence of Salmonella ententidis to be extremely low about egg per million eggs pro And while no other country has conducted as comprehensive a survey of laying flocks incidence elsewhere is thought to be signi higher Salmonella is a infection found in many foods including eggs and can cause flu like symptoms The ll Iness can be more serious in the very young the elderly pregnant women or those who are sick However even for this group pro cooked eggs are easd digested and provide an excellent source of protein No cases of human llness caus by Salmonella have ever been linked to Canada Grade A eggs John Kellar Agriculture Canada Associate Director for Disease Control said Dr Kellar s comments were sup ported by Hermy Chief of the National Laboratory of Enteric Pathogens Laboratory Centre for Disease Control Mr Lior stated that Salmonella ententidis is not a major problem in Canada Agriculture Canada is acknowledged to have one of the best inspection systems in the world Together with Health and Welfare Canada the Canadian egg industry through its producer organizations at the national and provincial levels works to ensure the Canadian egg supply is safe The latest study is an example of the close monitoring to which eggs are subjected Recently Agriculture Canada has increased its surveillance to ensure imported egg laying hens and eggs do not n Salmonella nto the Canadian egg supply Nonetheless consumers and industry employees have a to protect health by following a few mple guidelines many of which are equally applicable to the handl and preparation of other foods These include purchas only clean uncracked Grade A eggs keeping eggs refrigerated until just before use always washing hands before preparing foods and using clean utensils and work sur faces when preparing them LOOK GOOD FEEL GREAT Mah and Female Memberships Available Trial Membership is WORK THAT BODY Morurcnnvfi 877077J DR NARESH MOHAN FRCSC wishes to announce the opening of his practise in GENERAL SURGERY at A Princess Anne Drive Georgetown Appointments by referral only Phone not v J Walter Clare appointed Superintendent of Bankruptcy August The Superintendent of Bankrupt cy is responsible for the regulation of the insolvency process the licensing of trustees bankrupt and the investigation of the con duct of bankrupts for possible of fences under the Bankruptcy Act or the Cnminal Code of Canada Mr Clare was born in Sudbury Ontano and educated in Ottawa He began his career in the federal Public Service in Since 1968 Mr Clare has held a number of ad mm strative positions within the Bankruptcy Branch of Consumer and Corporate Affairs He became Regional Manager Bankruptcy for the Pacific Region in and as such was responsible for the supervision of bankruptcy opera and British Columbia and the Yukon In Mr Clare returned to Ot as Ass stant Director Con sumer Insolvency with respon for the coordination of bankruptcy policy and operation In December Mr Clare w appointed Assistant Supennten dent of Bankruptcy Mr Clare has also been lee on management and organ zat on for the Public Service Commission Mr Clare succeeds Yves P who retires on August 1990 Consumer warning Flying string highly flammable OTTAWA Ongoing testing by Consumer and Corporate Affairs Canada has shown that certain brands of flying string are highly flammable These novelty products come in aerosol cans that shoot out a string like streamer Streamers from these products can burst into flame when in contact with a heat Although importers have now stopped distnbution of the flammable products in Canada investigations by the Department indicate that some brands of the flammable products are still sold Canada Ply ing string packaged under the name of Super Stnng and bearing lot numbers V002 1 V0052 and V0083 has been sold recently in Canada and is known to be highly flammable As flammable flying stnng may appear on the market from time to time consumers are urged for greater safety to use any flying stnng aerosol as though it may be flammable These products should not be used by children They should never by used near matches cigarettes birthday candles or other flames or heat sources such as heaters Safety warnings an the can should always be followed Consumers should dispose of any know flammable product by spray the contents into a waste container away from flames or heat sources The empty container can then be thrown into the garbage but the cans should not be punctured or disposed of in an incinerator or trash compactor Flying was the subject of a Consumer and Corporate Af fairs warning bulletin on February 23 1990 and a news release on March 9 00 SHOPPING SPREE VALUE STORE LIVING LI I DANBEL TRACK LIGHTING moveable watt track heads com with ft of white track canopy kit COMPARE AT 89 LIVING LIGHTING r SMALL BUSINESS GEORGETOWN LIBRARY