What are Bonds?
A bond is a fixed income investment in which an investor loans money to an entity which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities. Owners of bonds are debtholders, or creditors, of the issuer.
How do bonds work?
Businesses may issue bonds directly to investors instead of obtaining loans from a bank when they need to raise money to finance new projects, maintain ongoing operations, or refinance existing debts.
The indebted entity issues a bond that contractually states the interest rate that will be paid and the time at which the loaned funds must be returned. The interest rate, called the coupon rate or payment, is the return that bondholders earn for loaning their funds to the issuer.
Does your company have bonds?
Businesses may issue bonds directly to investors instead of obtaining loans from a bank when they need to raise money to finance new projects, maintain ongoing operations, or refinance existing debts.
The indebted entity issues a bond that contractually states the interest rate that will be paid and the time at which the loaned funds must be returned. The interest rate, called the coupon rate or payment, is the return that bondholders earn for loaning their funds to the issuer.
Does your company have bonds?
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