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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 MatchesSecured bondSecured bondA bond which is secured by the guarantee of assets or collateral. Subordinated bondsSubordinated bondsSecurities that fall after others in priority of claims on the entity in the case of financial distress. Pickup bondPickup bondA bond with a relatively high coupon that is close to the date at which it is callable, meaning that a fall in interest rates will most likely cause early redemption of the bond at a premium. Perpetual bondPerpetual bondNonredeemable bond with no maturity date that pays regular interest rates indefinitely. Bond equivalent basisBond equivalent basisThe method used for computing the bond-equivalent yield. Further SuggestionsSour bondPerformance bond Salomon Brothers Non US Dollar World Government Bond Index short bond Joint bond Death backed bonds bond rating Senior mortgage bond Bailout bond bulldog bond Bond of Indemnity performance bond Bond indexing Prior lien bond Commodity backed bond Additional bonds test Government bond Mismatch bond Chastity bonds Series HH bond Optional payment bond Discount bond Dollar bonds Federal agency bond Bearer bond |
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