bond


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Bond

Bonds are debt and are issued for a period of more than one year. The US government, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically.

Bond

A security representing the debt of the company or government issuing it. When a company or government issues a bond, it borrows money from the bondholders; it then uses the money to invest in its operations. In exchange, the bondholder receives the principal amount back on a maturity date stated in the indenture, which is the agreement governing a bond's terms. In addition, the bondholder usually has the right to receive coupons or payments on the bond's interest. Generally speaking, a bond is tradable though some, such as savings bonds, are not. The interest rates on Treasury securities are considered a benchmark for interest rates on other debt in the United States. The higher the interest rate on a bond is, the more risky it is likely to be.

There are several different kinds of bonds. The most basic division is the one between corporate bonds, which are issued by private companies, and government bonds such as Treasuries or municipal bonds. Other common types include callable bonds, which allow the issuer to repay the principal prior to maturity, depriving the bondholder of future coupons, and floating rate notes, which carry an interest rate that changes from time to time according to some benchmark. Along with cash and stocks, bonds are one of the basic types of assets.

bond

1. A long-term promissory note. Bonds vary widely in maturity, security, and type of issuer, although most are sold in $1,000 denominations or, if a municipal bond, $5,000 denominations.
2. A written obligation that makes a person or an institution responsible for the actions of another.

Bond.

Bonds are debt securities issued by corporations and governments.

Bonds are, in fact, loans that you and other investors make to the issuers in return for the promise of being paid interest, usually but not always at a fixed rate, over the loan term. The issuer also promises to repay the loan principal at maturity, on time and in full.

Because most bonds pay interest on a regular basis, they are also described as fixed-income investments. While the term bond is used generically to describe all debt securities, bonds are specifically long-term investments, with maturities longer than ten years.

bond

a FINANCIAL SECURITY issued by a company or by the government as a means of borrowing long-term funds. Bonds are, typically issued for a set number of years (often 10 years plus), being repayable on maturity. They are issued in units of a fixed (nominal) face value and bear a fixed (nominal) rate of interest. Purchasers of bonds include private individuals, commercial banks and institutional investors (pension funds, etc.) who hold them as a form of portfolio investment.

Once issued, bonds can be bought and sold on the STOCK MARKET. Bond prices tend to fluctuate at prices below their face value, reflecting buying and selling strengths, but are closely linked to prevailing market interest rates so as to remain attractive to potential buyers. For example, a £100 bond with a nominal 5% interest rate returning £5 per year would have to be priced at £50 if current market interest rates were 10% so that a buyer could earn an effective return of £5/£50 = 10% on his investment.

In addition to their role as a means of borrowing money, the sale and purchase of bonds is used by the monetary authorities to control the MONEY SUPPLY. See MONETARY POLICY. See also EUROCURRENCY MARKET, GILT-EDGED SECURITY.

bond

a FINANCIAL SECURITY issued by businesses and by the government as a means of BORROWING long-term funds. Bonds are typically issued for periods of several years; they are repayable on maturity and bear a fixed NOMINAL (COUPON) INTEREST RATE. Once a bond has been issued at its nominal value, then the market price at which it is sold subsequently will vary in order to keep the EFFECTIVE INTEREST RATE on the bond in line with current prevailing interest rates. For example, a £100 bond with a nominal 5% interest rate paying £5 per year would have to be priced at £50 if current market interest rates were 10%, so that a buyer could earn an effective return of £5/50 = 10% on his investment.

In addition to their role as a means of borrowing money, government bonds are used by the monetary authorities as a means of regulating the MONEY SUPPLY. For example, if the authorities wish to reduce the money supply, they can issue bonds to the general public, thereby reducing the liquidity of the banking system as customers draw cheques to pay for these bonds. See also OPEN MARKET OPERATION, BANK DEPOSIT CREATION, PUBLIC SECTOR BORROWING REQUIREMENT, SPECULATIVE DEMAND FOR MONEY, CONSOLS.

bond

A certificate that provides evidence of a debt or obligation.

Bond

A note obliging a corporation or governmental unit to repay, on a specified date, money loaned to it by the bondholder. The holder receives interest for the life of the bond. If a bond is backed by collateral, it is called a mortgage bond. If it is backed only by the good faith and credit rating of the issuing company, it is called a debenture.
References in classic literature ?
The habit in him, she felt, strengthened the secret bond that existed between them.
Let it never be forgotten, that no slaveholder or overseer can be convicted of any outrage perpetrated on the person of a slave, however diabolical it may be, on the testimony of colored witnesses, whether bond or free.
While he kept himself in his place, as a physician, whose business was with all degrees of mankind, bond and free, rich and poor, bad and good, he used his personal influence so wisely, that he was soon the inspecting physician of three prisons, and among them of La Force.
While Godfrey Cass was taking draughts of forgetfulness from the sweet presence of Nancy, willingly losing all sense of that hidden bond which at other moments galled and fretted him so as to mingle irritation with the very sunshine, Godfrey's wife was walking with slow uncertain steps through the snow-covered Raveloe lanes, carrying her child in her arms.
However I with thee have fixt my Lot, Certain to undergoe like doom, if Death Consort with thee, Death is to mee as Life; So forcible within my heart I feel The Bond of Nature draw me to my owne, My own in thee, for what thou art is mine; Our State cannot be severd, we are one, One Flesh; to loose thee were to loose my self.
said he; ``to take no more notice of a free guild-brother, than if I were a bond slave or a Turk, or a circumcised Hebrew like themselves
In Bond Street he found a hansom with a good horse.
They were knit together in a strict and sacred bond, to take care of the good of each other and of the whole.
We lived together, we loved, we hated together; we shed, we mingled our blood together, and too probably, I may still add, that there may be yet a bond between us closer even than that of friendship; perhaps there may be the bond of crime; for we four, we once did condemn, judge and slay a human being whom we had not any right to cut off from this world, although apparently fitter for hell than for this life.
They went, we will suppose, in parties and groups, here a hundred, there a score, there ten, there three or four, who possessed some bond of unity among themselves.
How cheerfully the bond he signed, To pay the money back again!
Trades and professions march together with scarcely a more real bond of union.