A bond is a documentation of money owing which is frequently interest-bearing or discounted, that is subject matter by government or any corporation for raising money. The issuer of this debt is required to pay-off some of the fixed amount of sum that is being raised annually until the date of maturity. A bondholder is being given a check from particular company with which it belongs at set various intervals. The rate-of-interest of a bondholder is completely dependent on strength of the company that has issued the required bond.
Who can issue Bond? Governments, Municipalities, Educational Institutions, Corporations and many such companies. You can find that are different type of bonds with their effective features and characteristics of outcome. The mainly notable bonds are zero coupon and convertible bonds. A bond is similar to a loan, the issuer is the debtor, the holder is the creditor and coupon is its overall interest. Effective Bonds delivers external funds & finance for companies those who have long-term investments, or government bonds for financing the current expenditure. Most of these bonds are being bought by institutions like central banks, wealth & pension funds, insurance companies and general banks. Many of the bonds are subject to a variety of risks such as call & prepayment risk, reinvestment risk, credit risk, liquidity risk, volatility risk, exchange rate risk and inflation risk.
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