The Basics of Bonds: Bonding


As discussed in Chapter 4, bonds are loans. A company or a government borrows money from you and makes certain guarantees to you regarding that loan. This can also be referred to as the company (or government) issuing debt. The primary guarantees that are made which are common to bond issuances are:

The length of time before the funds borrowed by the entity need to be repaid

The interest rate that the borrower will be paying you for the use of your money

What the borrower is using to ensure that they can pay the interest and repay the original loan amount when the bond comes due.

All of this ...

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