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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 MatchesIncome bondIncome bondA bond which provides income over its life and at maturity the original investment is returned. See: 'guaranteed income bond'. Industrial revenue bond (IRB)Industrial revenue bond (IRB)A bond issued by local government agencies on behalf of corporations. Adjustment bondAdjustment bondA bond issued in exchange for outstanding bonds when a corporation facing bankruptcy is recapitalized. Optional payment bondOptional payment bondA bond whose principal and/or interest may be paid in foreign or domestic currency at the discretion of the bondholder. Flower bondFlower bondGovernment bonds that when owned at the time of death are acceptable at par in payment of federal estate taxes. Further SuggestionsCommodity backed bondGold bond Premium bond Performance bond bond interest yield Corporate bonds General Mortgage Bond Foreign bond market Bond rating Positive covenant (of a bond) Eleven bond index Municipal bond fund Bond points Bond power convertible bond I bonds Samurai bond Housing bond Lehman Brothers California Municipal Bond Index Special assessment bond Inactive stock or bond Series HH bond Cross border bonds US Treasury bond Pure discount bond |
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