Search results
Results From The WOW.Com Content Network
In finance, a bond is a type of security under which the issuer owes the holder a debt, and is obliged – depending on the terms – to provide cash flow to the creditor (e.g. repay the principal (i.e. amount borrowed) of the bond at the maturity date and interest (called the coupon) over a specified amount of time. [1])
Put simply, a bond is an individual debt instrument, while bond funds invest in a collection of individual bonds. A bond is a contract between a borrower and a lender.
Savings bond. Corporate bond. Interest. Yields are typically lower than corporate bonds, such as 3 percent to 4 percent. Interest varies considerably based on what the company offers.
The coupon (of a bond) is the annual interest that the issuer must pay, expressed as a percentage of the principal. The maturity is the end of the bond, the date that the issuer must return the principal. The issue is another term for the bond itself. The indenture, in some cases, is the contract that states all of the terms of the bond.
Buy a bond fund: Investing in a bond fund offers instant diversification, more liquidity than owning individual bonds, professional management and a lower minimum investment.
It is known as a term deposit or time deposit in Canada, Australia, New Zealand, and as a bond in the United Kingdom. A fixed deposit means that the money cannot be withdrawn before maturity unlike a recurring deposit or a demand deposit. Due to this limitation, some banks offer additional services to FD holders such as loans against FD ...
Bond funds offer diversification, as they invest in multiple bonds, reducing the risk associated with any single bond defaulting. Bond funds also offer a wide range of options for investors.
Treasury bonds are generally considered the safest kind of bond, so there is no credit risk. If you invest in a corporate bond that has the same type of characteristics (maturity, coupon) of a treasury bond, you can assume it has the same amount of interest rate and reinvestment risk, plus some amount (a 'spread') of credit risk.