BondsBonds are debt instruments, which means they are a way of b... More are instruments, which means they are a way of borrowing .
The entity ‘issuing’ the bond (i.e. selling the bond) pays back the moneyMoney is a generally accepted medium of exchange to buy and... More to the entity/ purchasing the bond with some kind of .
Bond issuers are typically a or a government that wishes to raise money for a specific purpose.
The period they borrow the money for is usually a predetermined period (also called maturity), at a fixed interest rateWhat are interest rates in trading? When one party lends mo... More (also referred to as a coupon of yield). Bonds are also commonly known as fixed-income .
If the entity that issues the bond is considered to be at high risk of defaulting on the repayments to the lender, then they will have to pay a higher interestWhat is interest? In finance and trading, interest is a fe... More rate than a less-entity would.
Bonds are graded in terms of how risky they are. The highest credit rating is AAA, meaning that the risk of defaulting is minimal. The lowest grade a debtDebt is a type of liability. It is an obligation by one pa... More instrument such as a bond can have is junk status. These bonds are called junk bonds.
Although bonds and stocks are both securities, they are different in that, as a shareholderWhat is a shareholder? A shareholder or stockholder is a... More, you own a part of a company, whereas as a bondholder, you only lend money.
As a form of , bonds can play an important role when building your .
