Date post: | 06-May-2015 |
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Education |
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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