Bonds W H A T A R E …

Bonds?

Not These Bonds

Like This Bonds

Bonds Are loans made by the investor to the

issuer; the investor is repaid with

interest

Bonds Are loans made by the investor to the

issuer; the investor is repaid with

interest

These Bonds

Not this Bond

This Means YOU loan your money to a company, city, or a government.

THEY promise to pay you back in full, with interest.

Why A r e b o n d s i s s u e d ?

MONEY B o n d s a r e i s s u e d b e c a u s e

Companies and Governments need

Companies Use bonds to he lp the i r bus i ne s s g row

Governments Use bonds for t h i ng s such a s i n f r a s t ruc ture and

soc i a l p rograms

Bonds The Types of

Corporate Bonds Bonds i s sued by compan ie s

Municipal Bonds Bonds i s sued by s t a te s , c i t i e s , and

loca l government s

Treasury Bonds Bonds i s sued U .S . Government

U.S. Savings Bonds Bonds i s sued U .S . Government tha t

e a rn i n te re s t , and a f t e r a se t t ime the

bond can be c a shed i n for i t s or i g i n a l

v a l ue p l u s t he i n te re s t .

Bonds How do

Work?

Issuer The indebted ent ity (the

company/government) is the

Face

The amount paid

(orig inal va lue) for a

bond is cal led the

Value

Coupon

The interest rate that

the bond wi l l be paid

i s the

Maturity

The date on which the face value of a

bond becomes due and is repaid to the

investor and interest payments stop is the

Date