Bond

 

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Bond

A 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.

Bond

The 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 Matches

Global bonds

Global bonds

Bonds designed to qualify for immediate trading in any domestic capital market and in the Euromarket.


Flower bond

Flower bond

Government bonds that when owned at the time of death are acceptable at par in payment of federal estate taxes.


Policyholder loan bonds

Policyholder loan bonds

Packaged loans acquired by policyholders that are secured by the cash surrender value of the policies, and are offered by a broke../../finance-glossary/dealer as bonds.


Performance bond

Performance bond

A surety bond between two parties, insuring one party against loss if the terms of a contract are not fulfilled.


High coupon bond refunding

High coupon bond refunding

../../finance-glossary/ a high-coupon bond with a new, lower-coupon bond.


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