💥WHAT ARE BONDS? (Visit our Website News Feeds for Consistent Updates about Market and News of Binary Options http://feeds.feed…

💥WHAT ARE BONDS?

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We are living in today’s socio-economic progressive world. As rational people, we should be aware of the economic scenario of the world. We have to look at the stock exchanges throughout the world to assimilate the basic perspective of the economy. Bonds play an important and effective part in the stock exchange.

💥What is the definition of a bond?
Investors purchase bonds as a form of security from the bond issuing authority, which may be a company, a public entity, or a government, for interest that is specified in the bond’s policy document. Investors receive a fixed, recurring income.

Investment in bonds is for a certain period of time; after completion of that tenure, the investor will get the net gross amount back. The term or span of the bond may differ. When the investors invest money for not more than five years, these types of bonds are treated as short-term. There will be two more options available.

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In medium-term bonds, the redemption time will be less than ten years. The bonds which have a tenure of 30 years or more are considered long-term bonds. The interest rate or technically known as a coupon of long-term bonds is a little higher than the other two.

We can describe bonds in a nutshell that literally, bonds are bonding or contract of trust between lender and borrower with financial profit.

=> Examples of bonds
In the money market, we may deal with a variety of bonds, including the following:

1. Government bonds
In these kinds of government bonds, a general citizen can purchase bonds issued by the government and mainly used for the reformation of the state. The coupons of this bond generally remain low, but most government declares the redeemed amount is exempted from tax.

2. Treasury bonds or T-bonds:
Treasury bonds, treasury notes, and treasury bills are directly issued by the government, so these are also considered kinds of government bonds. But it has a difference in the bond term. In most cases, T- bonds take more than twenty years and above, considered long-term bonds. It is believed that the Treasury bond has the least risks with low coupons. In comparison, T-bills deal with short-term investments.

3. Municipal bonds:
These bonds are also associated with the government. Municipality or states issued these bonds to raise funds to accomplish government projects such as building schools, construction of roads, etc.

4. Agency bonds:
Agency bonds are issued by the government-associated agency. The rate of interest is a little higher than T-bonds. It is notable for higher liquidity and lesser risk.

5. Corporate bonds:
In corporate bonds, investors invest in private corporations. A corporate bond has more threat or risk than the previous because it deals with a private organization and its business through the coupon is much more than other bonds.

It is evident that at present, in the global volatile money market, bonds are much more secure than other stock market-oriented investments. The bond market is growing faster and gaining importance. By investing in bonds, investors may get a very low rate of interest though it is trustworthy.

In a financial crisis, the bond issuing authority’s first choice would be to bring back the bondholder’s investment rather than the stakeholders, thus giving a sense of security to the investors.

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