Question

bond for

Answer 1

Companies and governments have two common ways of raising money from the public: they can borrow it (bonds) or they can sell you a small piece of property (stocks).

Businesses need money to undertake projects. So they pay with the money earned through the project. One way to raise money is through bonds. When a company borrows from the bank in exchange for regular interest payments, it is called a loan. Similarly, when a company borrows from multiple investors in exchange for one-time interest payments, it is called a bond.

Bonds are essentially bills of exchange. But unlike loan documents issued with a bank loan or credit card debt, the borrower of the bond provides all lenders with a standardized certificate that can be easily bought or sold to other investors.

Since bonds are securities, they can easily be bought and sold on the public market ... and it's a huge market. The US bond market is the largest stock market, larger than stocks or commodities.

As investments, bonds are distinguished in two main ways:

1) The borrower agrees to pay a fixed interest rate at fixed intervals, for a fixed period of time. Upon maturity of the bond, the issuer undertakes to repay the initial loan.

2) Bonds are preferred securities. This means that if a company or government is in financial trouble, bondholders are "first in line" to raise their money.

SAVING

Saving for the future is best uses of bonds. Savings vouchers, as it is aptly called, provide one of the safest and proven approaches to long-term savings.