A bond in its simplest form is a loan issued by a government, company or other institution. Instead of taking a loan out through a bank, the borrower approaches investors for capital. The issuer promises to pay a fixed rate of interest or coupon for a fixed period at regular intervals until maturity, upon which they will repay the original loan or capital back to the investors (bondholders). Companies often issue Bonds as a way of financing expansion, rather than issuing further shares.
Written by Rezaah AhmadUpdated over a week ago