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BondA debt instrument, issued by a borrower and promising a specified stream of payments to the purchaser, usually regular interest payments plus a final repayment of principal. Bonds are exchanged on open markets including, in the absence of capital controls, internationally, providing a mechanism for international capital mobility.BondThe generic name for a tradable loan security issued by governments and companies as a means of raising capital.The bond guarantees its holder:repayment of capital at a future specified date (the maturity date)a fixed rate of interest (also known as the coupon)Government bonds are known as gilts or Treasury Stock.Bonds offer certainty of income, but may fail to keep pace with inflation.As far as the capital is concerned, you only know exactly how much your bond is worth if you plan to hold it to maturity (when you will be paid back the face value). But in the time between issue and maturity, a bond's value can be as volatile as a share, and if you plan to sell before maturity you run the risk of capital erosion. In general:Bond prices fall when bank interest rates go up (because the interest rate rise attracts money out of bonds into cash)Fear of rising inflation will cause bond prices to fall, because investors worry that bonds will not bring enough income to keep pace with inflationThe German and American bond markets have an effect on UK bond prices, because they are competing for the same institutional capital.Similar MatchesStripped bondStripped bondBond that can be subdivided into a series of zero-coupon bonds. Inactive stock or bondInactive stock or bondA security that trades in very small volume on a daily basis. See:: Illiquid. Discount bondDiscount bondDebt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond. Performance bondPerformance bondA surety bond between two parties, insuring one party against loss if the terms of a contract are not fulfilled. Bond equivalent yieldBond equivalent yieldBond yield calculated on an annual percentage rate method. Differs from annual effective yield. Further SuggestionsPar bondmunicipal bond Bearer bond bond yield Collateral trust bonds Equivalent bond yield Bond agreement Bond swap Passive bond long bond property bond Mismatch bond baby bond bond anticipation note Completion bonding Toll revenue bond guaranteed income bond Domestic bonds children's bonus bond Bonded warehouse Flower bond Bond fund Series EE bond Series E bond short bond |
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