What are Bonds? Special Article for Banking Exam

Gentlemen prefer bonds, punned Andrew Mellon, an American tycoon. A bond is an interest-bearing security issued by governments, companies and some other organizations. 

Bonds are an alternative way for the issuer to raise capital to selling shares or taking out a bank-loan. Like shares in listed companies, once they have been issued bonds may be traded on the open market.

 A bond's yield is the interest rate (or coupon) paid on the bond divided by the bond's market price. Bonds are regarded as a lower risk investment. government bonds, in particular, are highly unlikely to miss their promised payments.
 
What are Bonds? Special Article for Banking Exam
What are Bonds? Special Article for Banking Exam

 Corporate bonds issued by blue-chip "investment grade" companies are also unlikely to default; this might not be the case with high-yield "junk" bonds issued by firms with less healthy financials. (See yield curve.)
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