Sunday, May 26th 2019

What is a Bond?

Bonds, also referred to as “fixed income,” are an asset class that is characterized by income and relatively stable values. They operate just like an IOU: an investor gives money to a borrower for a definite amount of time and receives fixed income payments until the debt is repaid (maturity). The world of bonds is massive but issuers of bonds include: the government, municipalities, public corporations of all credit qualities and a variety of private issuers. The core concerns for a bond investor will be the creditworthiness of the issuer (the US Government is considered the safest investment), the liquidity of the bonds (the ability to sell the bond early, if necessary) and the interest-rate risk of a bond.

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