2007-01-02 02:10:17 · 7 answers · asked by Anonymous in Business & Finance ➔ Other - Business & Finance
In finance, a bond is a debt security, in which the issuer owes the holders a debt and is obliged to repay the principal and interest (the coupon) at a later date, termed maturity. Other stipulations may also be attached to the bond issue, such as the obligation for the issuer to provide certain information to the bond holder, or limitations on the behavior of the issuer. Bonds are generally issued for a fixed term (the maturity) longer than ten years. U.S Treasury securities issued debt with life of ten years or more is a bond. New debt between one year and ten years is a note, and new debt less than a year-bill
A bond is simply a loan, but in the form of a security, although terminology used is rather different. The issuer is equivalent to the borrower, the bond holder to the lender, and the coupon to the interest. Bonds enable the issuer to finance long-term investments with external funds. Debt securities with a maturity shorter than one year are typically bills. Certificates of deposit (CDs) or commercial paper are considered money market instruments.
Traditionally, the U.S. Treasury uses the word bond only for their issues with a maturity longer than ten years, and calls issues between one and ten year notes. Elsewhere in the market this distinction has disappeared, and both bonds and notes are used irrespective of the maturity. Market participants normally use bonds for large issues offered to a wide public, and notes rather for smaller issues originally sold to a limited number of investors. There are no clear demarcations. There are also "bills" which usually denote fixed income securities with three years or less, from the issue date, to maturity. Bonds have the highest risk, notes are the second highest risk, and bills have the least risk. This is due to a statistical measure called duration, where lower durations have less risk, and are associated with shorter term obligations.
Bonds and stocks are both securities, but the difference is that stock holders own a part of the issuing company (have an equity stake), whereas bond holders are in essence lenders to the issuer. Also bonds usually have a defined term, or maturity, after which the bond is redeemed whereas stocks may be outstanding indefinitely. An exception is a consol bond, which is a perpetuity, a bond with no maturity.
2007-01-02 05:11:38 · answer #1 · answered by Anonymous · 0⤊ 0⤋
in investing it is a loan to a company or government, you buy a 1000 bond, they pay you interest for the stated number of years,then pay back the loan
there are other ways it works as well, a zero coupon bond, say you pay 400 and get paid back 1000 in so many years
2007-01-02 10:14:11 · answer #2 · answered by swenjj 4 · 0⤊ 1⤋
Bond is something that binds, fastens, confines, or holds together. Something that binds a person or persons to a certain circumstance or line of behavior. Something, as an agreement or friendship, that unites individuals or peoples into a group; covenant
Examples:
he bond of matrimony
the bond between nations
My word is my bond
2007-01-02 10:13:18 · answer #3 · answered by sarabmw 5 · 0⤊ 2⤋
That's rather vague! James Bond? A whiskey bond? The verb as in "to bond"?
2007-01-02 10:12:03 · answer #4 · answered by Sami 3 · 0⤊ 1⤋
A bond is money you lend to a company(or government) with an agreement that they will pay you a certain amount of interest over a specified period of time.
2007-01-02 10:13:47 · answer #5 · answered by VATreasures 6 · 0⤊ 1⤋
a) James Bond
b) Close-link between two
c) An investment instrument
You can choose any depending on your requirement!
2007-01-02 10:22:45 · answer #6 · answered by Sami V 7 · 0⤊ 1⤋
in simple sense it is an paper with an agreement with financial, industrial, insurance , commiting to preset points laid.
2007-01-04 06:25:00 · answer #7 · answered by metroguy 1 · 0⤊ 1⤋