Bond (finance)

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A bond is a contract between two parties.

Companies or governments issue bonds because they need to borrow large amounts of money. They issue bonds and investors buy them (thereby giving the people who issued the bond money).

Bonds have a maturity date. This means that at some point, the bond issuer has to pay back the money to the investors. They also have to pay the investors a little bit more than they paid for the bond.

Bonds are usually traded through brokers and are part of a financial instrument group called Fixed Income. Banks and financial institutions offers loans on different terms against the security of assets.