Bonds

Bonds are fixed-income instruments that represent a loan made by an investor to a borrower—typically a corporation or government. When you purchase a bond, you are essentially lending money for a specified period in exchange for periodic interest payments (known as coupon payments) and the return of principal at maturity.

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Widely Used For

Raising capital by governments and companies
Diversifying portfolios with relatively predictable income streams
Funding infrastructure, expansion, or refinancing needs

FAQs

It is the fixed interest rate the bond issuer agrees to pay investors, usually on an annual or semi-annual basis.

YTM is the total return expected if the bond is held until maturity, considering both coupon payments and the difference between purchase price and face value.

Shares represent ownership in a company, while bonds are a loan to the company or government, offering fixed returns without ownership rights.

Face value (also called par value) is the nominal value of a financial instrument like a bond or share, set by the issuer.

Secured bonds are backed by specific collateral (e.g., assets of the issuer).
Unsecured bonds (debentures) rely solely on the issuer’s creditworthiness.

Callable bonds allow the issuer to repay before maturity.
Puttable bonds allow investors to sell back to the issuer before maturity.

Credit rating agencies (like CRISIL, ICRA, CARE) evaluate the issuer’s creditworthiness, indicating relative risk levels of default.

Primary market is where new bonds are issued.
Secondary market is where existing bonds are traded among investors.