Learn about investing in bonds, options to buy bonds, and understanding bond concepts such as coupons, par value, and bond ratings.
What is a Bond?
A bond is a debt security issued to raise funds and the issuer gives you a promised rate of returns. It is a long-term fixed interest security with a maturity above 1 year. A bond’s pricing is affected by the coupon rate, principal (par) value, years to maturity, and rate of return (discount rate).
- Supranational bonds: issued by internal groups/powers
- Government/sovereign bonds: issued by governments
- State/non-government/municipal bonds: issued by state-governments
- Quasi government bonds: issued by quasi-government agencies
- Corporate bonds: issued by companies
- Individual/celebrity bonds: issued by individuals
What do You receive as a Bondholder?
- Interest payments (coupons)
- Your principal sum on maturity (par value)
- Bonds generally viewed as safer and less volatile investment asset class compared to equities.
- Investors can more easily understand bonds with access t