Bond Basics

What Are Bonds?

A bond is a debt security, a loan similar to an I.O.U. When you purchase a bond, you are lending money to a government, corporation, or other entity known as the “issuer.” In return for the loan, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it “matures,” or comes due.

After they are issued, bonds can be traded, bought and sold. Among the types of bonds you can choose from are: government securities and foreign government bonds, sub-sovereign, supranational and quasi-government bonds, corporate bonds, and collateralised securities.

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