A bond is commonly understood to be a debt instrument in which a borrower receives an advance of funds and contracts to make future payments of interest and principal according to an explicit schedule. The nominal return from holding a bond is the sum of its interest payments and the change in its price over an arbitrary holding period. Bonds differ in terms of face value, maturity, callability, seniority, convertibility, risk of default, and size, frequency and taxability of interest payments. Since 1970 bond markets have experienced a number of major institutional changes with enduring consequences for capital markets.
KeywordsAsset-backed debt Bankruptcy Bonds Capital gains and losses Central banks Default Defeasance Derivative securities Discount bonds Eurobonds Interest rates Junk bonds Medium term notes Miller, M. Modigliani, F. Options Sovereign debt Stripped bonds Tobin, J.
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