What is a bond and how is it traded in financial markets?

Expert Solution

A bond is a debt instrument which is used by corporates in order to raise money from the market and bonds will be issued for short term as well as long term in order to meet with various demands of these corporate organisation so bonds will be providing the investors the right of creditors in the the corporation and it will be providing them with interest payments which are tax deductible in nature from the perspective of the organisation.

Bonds will be providing with fixed income in the form of interest payment and they will be providing with the principal amount at the maturity and these bondholders will not be having any kind of right to vote in the organisational matters.

Bonds are traded in the secondary market after they have been purchased so these bonds will be having a very low tradability and these are mostly traded over the counter market between large clients .The bond price and a bond yield will be determining the market price of the bond.

jeff jeffy answered 1 year ago

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What is a bond and how is it traded in financial markets?

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