Bonds are loans that an investor makes either to a government agency (US Treasury bonds or notes1 or Municipal bonds) or to a corporation (Corporate bonds). The borrower promises to pay the lender interest at regular intervals (usually every six months) and to repay the principal at the end of the loan. In investor’s language the previous sentence reads, “The borrower promises to pay the lender the coupons on the coupon payment dates and to pay the face value of the bond at the redemption date.”
KeywordsInterest Rate Current Yield Time Diagram Corporate Bond Treasury Bill
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