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

Bond premium

Bond premium

See: Bond discount


Senior mortgage bond

Senior mortgage bond

A mortgage bond which receives priority on the assets of a company over other bonds in the event of liquidation.


Bond mutual fund

Bond mutual fund

A mutual fund which invests in bonds which may be government, municipal or corporate.


Guaranteed growth bond

Guaranteed growth bond

A bond in which a single premium secures a guaranteed amount at its maturity date.


Income bond

Income bond

A bond which provides income over its life and at maturity the original investment is returned. See: 'guaranteed income bond'.


Further Suggestions

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Split coupon bond
Twenty bond index
guaranteed income bond
Series E bond
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bulldog bond
Stripped bond
Adjustment bond
Authority bond
Utility revenue bond
Municipal bond insurance
Salomon Brothers Non US Dollar World Government Bond Index
Bond covenant
Shogun bond
Short term bond fund
Public housing authority bond
corporate bond
Savings bond
Positive covenant (of a bond)
Collateralized Bond Obligation (CBO)
growth bond
Lehman Brothers New York Municipal Bond Index
baby bond
Z bond


 
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