The name's Bond...Corporate, Bond. 😎

Good morning!
Let’s get smarter with money. Everyone always throws around this term “bond.” “I have my money in bonds.” What the heck are they talking about?

DEFINITION
A 9th grade explanation of a bond

• Imagine you're loaning money to a big company or the government. That's essentially what a bond is. When you buy a bond, you're lending money to the issuer, whether it's a corporation or a government entity. In return, they agree to pay you back the amount you lent, known as the face value, after a certain period, called the maturity date. Along the way, they also pay you interest, usually at regular intervals, for the privilege of using your money. Bonds are like an investment where you're the lender, and the issuer is the borrower.

WHAT DOES A BOND LOOK LIKE?

• In 2024, bonds primarily exist in digital form, with most transactions and ownership records being stored electronically.

MORE DEFINITIONS
Here are the key terms of a bond

• Bond: A financial instrument representing a loan made by an investor to a borrower (typically corporate or governmental) for a defined period at a fixed interest rate.

  Issuer: The entity, whether a corporation or a government, that borrows money by issuing bonds.

  Face Value: The nominal value of a bond that is repaid to the bondholder at maturity. It's also referred to as the par value.

  Maturity Date: The date when the bond issuer repays the bondholder the face value of the bond. It marks the end of the bond's term.

  Interest: The payment made by the borrower to the lender (bondholder) for the use of their money, usually calculated as a percentage of the bond's face value.

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