Bizblog term of the week: BONDS

Bonds are debt instruments issued by a debtor(Issuer) to a creditor(Bondholder).
Bonds are fixed income securities.

The bondholder lends money to an entity(Entity here means a multinational or government) for a period of time with a fixed interest rate.

Bonds are been issued to raise funds for a capital project, a date at which the bondholder will get their face value and the coupon(i.e the interest rate) attached to the investment must be stated.

A bond is a promise to repay the principal along with interest (coupons) on a specified date (maturity),its a form of IOU(I Owe You).There are various types of bonds which include;

• Zero Coupon bonds
• Convertible bonds
• Callable bonds
• Fixed rate bonds
• Floating rate bonds
• High yield bonds
• Exchangeable bonds
• Perpetual bonds