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- Dictionarybond/bɒnd/
noun
- 1. a relationship between people or groups based on shared feelings, interests, or experiences: "there was a bond of understanding between them" Similar
- 2. a connection between two surfaces or objects that have been joined together, especially by means of an adhesive substance, heat, or pressure: "there was no effective bond between the concrete and the steel"
verb
- 1. join or be joined securely to something else, especially by means of an adhesive substance, heat, or pressure: "press the material to bond the layers together"
- 2. join or be joined by a chemical bond: "neutral molecules bond to the central atom"
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BOND definition: 1. a close connection joining two or more people: 2. an official paper given by the government or…. Learn more.
- What Is A Bond?
- How Bonds Work
- Characteristics of Bonds
- Bond Categories
- Bond Prices and Interest Rates
- Yield-To-Maturity
- How to Invest in Bonds
- Bond Variations
- The Bottom Line
A bond is a fixed-income instrumentand investment product where individuals lend money to a government or company at a certain interest rate for an amount of time. The entity repays individuals with interest in addition to the original face value of the bond. Bonds are used by companies, municipalities, states, and sovereign governments to finance ...
Bonds are debt instruments and represent loans made to the issuer. Bonds allow individual investors to assume the role of the lender. Governments and corporations commonly use bonds to borrow money to fund roads, schools, dams, or other infrastructure. Corporations often borrow to grow their business, buy property and equipment, undertake profitabl...
Face value or Par Value: The value of the bond at maturity and the reference amount the bond issuer uses when calculating interest payments.Coupon Rate:The rate of interest the bond issuer will pay on the face value of the bond, expressed as a percentage.Coupon Dates:The dates on which the bond issuer will make interest payments.Maturity Date:The date on which the bond will mature and the bond issuer will pay the bondholder the face value of the bond.There are four primary categories of bonds sold in the markets. However, you may also see foreign bondsissued by global corporations and governments on some platforms. 1. Corporate Bonds: Companies issue corporate bondsrather than seek bank loans for debt financing because bond markets offer more favorable terms and lower interest rates. 2. Municip...
A bond's price changes daily where supply and demand determine that observed price. If an investor holds a bond to maturitythey will get their principal back plus interest. However, a bondholder can sell their bonds in the open market, where the price can fluctuate. a bond’s price varies inversely with interest rates. When interest rates go up, bon...
The yield-to-maturity (YTM) is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term bond yield but is expressed as an annualrate. YTM is the internal rate of return of an investment in a bond if the investor holds the bond until maturity and if all payments are made as...
While there are some specialized bond brokers, most online and discount brokers offer access to bond markets, and investors can buy them like stocks. Treasury bonds and TIPS are typically sold directly via the federal government and can be purchased via its TreasuryDirect website. Investors can also buy bonds indirectly via fixed-income ETFs or mut...
The bonds available for investors come in many different varieties, depending on the rate or type of interest or coupon payment, by being recalled by the issuer, or because they have other attributes. 1. Zero-Coupon Bonds (Z-bonds): Do not pay coupon payments and instead are issued at a discount to their par value that will generate a return once t...
Bonds are issued by companies and governments to finance projects and fund operations. A bond is considered a fixed-income instrument since bonds traditionally pay a fixed interest rate to debtholders. Investors can purchase corporate bonds through financial institutions or online brokers or buy government bonds through the U.S. Treasury website.
- Jason Fernando
- 2 min
Apr 20, 2024 · Once the bond reaches maturity, the bond issuer returns the investor’s money. Fixed income is a term often used to describe bonds, since your investment earns fixed payments over the life of the ...
Sep 13, 2016 · Bond prices can also fall if investors think there is an increasing danger that they won't get the payments they are owed. To put it another way: the yield rises in those circumstances because ...
What is a bond? A bond is an investment that pays a fixed rate of return through interest or dividend income. They’re often used to balance equity risk, provide income, and hedge against inflation.
Jan 9, 2024 · Bond prices and yields move in opposite directions. When interest rates rise, prices tend to fall, and vice versa. This can affect the market value of a bond if you decide to sell it before it reaches maturity. A bond term refers to the length of time between the date the bond was issued and when the bond matures.
Aug 3, 2023 · Bond Yield. A bond's yield is a measure of its return. The yield is calculated using the bond's current market price (not its principal value) and its coupon rate. For example, a bond purchased at its face value of $1000 with a coupon rate of 5% returns $50 annually, so its yield is 5%. If the bondholder later sells the bond to another investor ...
