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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 MatchesConsolidated mortgage bondConsolidated mortgage bondA bond that covers several units of property, sometimes refinancing mortgages on the properties. Refunded bondRefunded bondAlso called a prerefunded bond, a bond that originally may have been issued as a general obligation or revenue bond but that is now secured by an escrow fund consisting entirely of direct U.S. government obligations that are sufficient for paying the bondholders. Serial bondsSerial bondsCorporate bonds arranged so that specified principal amounts become due on specified dates. Related: Term bonds. Split coupon bondSplit coupon bondA bond that begins as a zero-coupon bond paying no interest and converts to an interest paying bond on a future date. Discount bondDiscount bondDebt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond. Further Suggestionsserial bondbond mutual fund Toll revenue bond children's bonus bond I bonds Yen bond Corporate bonds Completion bonding Convertible eurobond Equivalent bond yield Lehman Brothers Municipal Bond Index Bond indenture municipal bond Long bonds guaranteed income bond Level coupon bond Bond rating Bond Buyer growth bond Bond of Indemnity Collateral trust bonds Mismatch bond International bonds Dollar bonds Guaranteed bond |
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