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

Income bond

Income bond

A 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 bond

Adjustment bond

A bond issued in exchange for outstanding bonds when a corporation facing bankruptcy is recapitalized.


Optional payment bond

Optional payment bond

A bond whose principal and/or interest may be paid in foreign or domestic currency at the discretion of the bondholder.


Flower bond

Flower bond

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


Further Suggestions

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General Mortgage Bond
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Bond rating
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Cross border bonds
US Treasury bond
Pure discount bond


 
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