Investor Glossary-bondsInvestor Glossary-bondsInvestor Glossary-bondsInvestor Glossary-bondsInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Bonds

WordPress
The HTML to link to this page
 

A bond is a financial instrument that is purchased by an investor (bondholder) and entitles the bondholder to receive payment of the principal and any interests associated with the bond (bond coupon interest), if applicable. Such payment is usually made on a specified date (bond maturity) and/or at specific intervals for interests payments. Unlike a stockholder, a bondholder does not receive any corporate ownership but rather an IOU from the bond issuer. Various type of bonds include government bonds (city, state, national), and corporate bonds. Credit quality (secured vs. unsecured) and duration are the key factors in setting the bond's interest rate. A secured bond is backed by collateral whereas an unsecured bond is only backed by the credit of the issuer. Therefore, with the exception of Treasury bonds, unsecured bonds can be seen as a riskier type of bond. In the case of Treasury bonds, however, while they are unsecured bonds, the credit of the issuer (the Treasury) makes those type of bonds the safest unsecured bonds on the market. Bond maturity is another feature of any bond and it can be as low as 90 days (90-day Treasury bill) or as high as 30 years (30-year Treasury bonds). Certain bonds issued by governmental entities are tax-exempt which makes their interest payment tax deductible.



Rate this bonds definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: required rate of return, ex-dividend, Zero Cost Collar, debt service coverage, quality assurance, class C shares, LIBOR, command economy, stock market close, per diem, VIX, reverse mortgage, 401a, current ratio, implied volatility, labor relations, stock split, deferred tax, APR, cancelled check, 1035 exchange, phantom income, deferred revenue, liquidity ratio, minority interest, in escrow, real GDP, irrevocable trust, average price per share, covered put, inflation, open position, 1031 exchange, Key Rate Duration, margin rate, EBITDA, risk management, retained earnings, 144a, wholly-owned subsidiary, FTSE, dividends payable, limit order, ex-dividend date, balance sheet, FICO score, annual return, option premium, diluted share


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use