Business, Legal & Accounting Glossary
The name sometimes given to loan finance (more commonly in the USA). A certificate of debt issued by a company or the government. Bonds generally pay a specific rate of interest and pay back the original investment after a specified period of time.
In finance, a bond is an instrument of indebtedness of the bond issuer to the holders.
The bond acts is a debt security, under which the issuer owes the holders a debt and (dependant upon the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date.
A bond is simply an IOU. It is an agreement under which a sum is repaid to an investor after an agreed period of time.
A bond can be issued by anyone but is usually issued by governments (see gilts) or public companies to repay money borrowed.
These loans normally repay a fixed rate of interest over a specified time and also repay the original sum at par in full after an agreed period – when the bond matures.
In finance and economics, a bond or debenture is a debt instrument that obligates the issuer to pay to the bondholder the principal (the original amount of the loan) plus interest.
Thus, a bond is essentially an I.O.U. (I owe you contract) issued by a private or governmental corporation.
The corporation “borrows” the face amount of the bond from its buyer, pays interest on that debt while it is outstanding, and then “redeems” the bond by paying back the debt.
A mortgage is a bond secured by real estate.
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.
• Long-term debt instrument used by business and government to raise large sums of money, generally from a diverse group of lenders. In the case of business bond issuers, a specific asset or assets are pledged as collateral.
• A bond is essentially a loan made by an investor to a division of the government, a government agency, or a corporation. The bond is a promissory note to repay the loan in full at the end of a fixed time period. The date on which the principal must be repaid is the called the maturity date, or maturity. In addition, the issuer of the bond, that is, the agency or corporation receiving the loan proceeds and issuing the promissory note, agrees to make regular payments of interest at a rate initially stated on the bond. Interest from bonds is taxable based on the type of bond. Corporate bonds are fully taxable, municipal bonds issued by state or local government agencies are free from federal income tax and usually free from taxes of the issuing jurisdiction, and Treasury bonds are subject to federal taxes but not state and local taxes. Bonds are rated according to many factors, including cost, degree of risk, and rate of income.
• A formal certificate of debt, issued by corporations or units of government.
• A legal obligation of an issuing company or government to repay the principal of a loan to bond investors at a specified future date. Bonds are usually issued with a Par or face value of $1,000, representing the amount of money borrowed. The issuer promises to pay a percentage of the par value as interest on the borrowed funds. The Interest payment is stated on the face of the bond at issue.
• Bonds are debt and are issued for a period of more than one year. The U.S. government, local governments, water districts, companies, and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically.
• The term bond refers to the long-term debt of companies or governments.
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This glossary post was last updated: 26th November, 2021 | 0 Views.