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The terms of the bond, such as the coupon, are fixed in advance and the price is determined by the market. In the case of an underwritten bond, the underwriters will charge a fee for underwriting. An alternative process for bond issuance, which is commonly used for smaller issues and avoids this cost, is the private placement bond. Bonds sold ...
A bond is a form of debt where the bond issuer borrows money in return for paying interest and returning the bond’s principal to the buyer when the bond matures. Bonds are commonly issued by ...
A government bond or sovereign bond is a form of bond issued by a government to support public spending. It generally includes a commitment to pay periodic interest , called coupon payments , and to repay the face value on the maturity date.
The coupon (of a bond) is the annual interest that the issuer must pay, expressed as a percentage of the principal. The maturity is the end of the bond, the date that the issuer must return the principal. The issue is another term for the bond itself. The indenture, in some cases, is the contract that states all of the terms of the bond.
The T-bond’s yield represents the return stemming from the bond, and is the interest rate the U.S. government pays to investors to borrow their money for a period of time.
Since bond funds hold a variety of bonds with different maturities, the price changes of individual bonds within the fund can offset each other. This helps to reduce the overall volatility of the ...
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events but offer higher yields than investment-grade bonds in order to compensate for the increased risk.
This happens because new bonds are issued with higher interest payments, making them more attractive than existing bonds with lower payouts. The opposite tends to happen when interest rates decline.
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