The bond is selling at par. The yield on a bond maturity has reduced if the annual coupon bond was issued at par four years ago.
What is bond ?
- Bonds are fixed-income securities that reflect loans from investors to borrowers. A bond can be compared to an agreement outlining the terms of the loan and the associated payments between the lender and borrower.
- Companies, municipalities, states, and sovereign governments utilise bonds to finance operations and initiatives. Bondholders are the issuer's debtors or creditors.
- Bond specifications typically include the terms for variable or fixed interest payments made by the borrower, as well as the end date by which the principle of the loan is expected to be paid to the bond owner.
- Bonds are a type of debt instrument that stand in for loans given to the issuer. Bonds are a frequent tool used by both governments and businesses to borrow money. Roads, schools, dams, and other infrastructure must be funded by the government. The sudden cost of conflict might also necessitate the necessity for fundraising.
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