A bond is a debt security wherein authorized issuers have to pay back a debt that the holder according to terms as laid out when taking the debt security. In addition to the principal amount owed the issuer must also pay certain interest till the debt matures.

A bond is also a contract that requires that the authorized Cialis Professional issuer pay back the borrowed sums of money with a certain interest at regular intervals. In other words, this kind of debt security is much like a loan in which the debtor is the person issuing this debt security and the holder is the creditor. The interest is termed as the coupon.

With the help of such debt securities that borrower gets hold of funds with which to finance certain long duration investments. However, when these debt securities are issued by a government they are used for financing current expenditures. These debt securities need to be paid back over a certain period of time and at regular intervals.

A bond may, just like a stock be a security but each is different to the other in that the latter has stockholders that have equity stakes and so are co owners. In the case of the holder of such an instrument, there is no such ownership and the position of the holder is that of a creditor. In addition, these instruments have a fixed time period after which they mature but in the case of stocks; these can be outstanding for an indefinite period of time. Only a consol bond is held in perpetuity and so is an exception to the rule.

It pays to look at the main features of such an instrument. These include that they have a nominal or face or principal amount on which the issuer must pay some interest. Another feature is that of issue price which the price is paid by investors to buy the debt securities when these are first issued. Typically, this price is the same as the nominal amount.

Another feature that characterizes a bond is that of maturity date. This is the date on which the issuer must pay back the nominal amount. If the payments are made regularly then the issuer does not have any further obligations to the holder, once the maturity date passes. Finally, each such instrument has an associated coupon or the interest rate that must be paid by the issuer to the holder.

It also pays to know about different No prescription cialis types of such instruments that include those such as fixed rate, floating rate, zero coupons, inflation linked, and other indexed bonds.

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Category: Finance/Credit/Debt Consolidation
Keywords: bond, bond costs