King bell
VIP Contributor
Bonds are debt securities that are issued by the government, companies, and financial institutions. Bonds enable firms to finance themselves because investors lend money to the issuer in return for an interest payment (coupon rate) and repayment of their investment (principal) at a set date in the future.
Bonds provide a steady income for investors because they always make predetermined fixed payments. The main risk for bondholders is that if the company defaults on its obligation, investors may not receive all of their original investment back or any return at all. There are many different types of bonds that vary based on who is issuing them (e.g., U.S., foreign), what they're invested in, what type of fixed payments they offer (e.g., semiannual, annual, etc.), and when payments are made.
Types of Bonds
Government bonds are issued by the U.S. federal government to finance budget deficits, promote economic growth and national security, and pay for other government obligations like unemployment insurance and Social Security. Treasury bills are debt securities owned directly by the federal government (i.e., the U.S. Treasury). The U.S. Treasury gives investors a very high level of certainty that they will be paid back in full because they take their money from the government at maturity (at which point they are redeemed). These securities are often referred to as "T-bills" or simply "Treasury bills.
Bonds provide a steady income for investors because they always make predetermined fixed payments. The main risk for bondholders is that if the company defaults on its obligation, investors may not receive all of their original investment back or any return at all. There are many different types of bonds that vary based on who is issuing them (e.g., U.S., foreign), what they're invested in, what type of fixed payments they offer (e.g., semiannual, annual, etc.), and when payments are made.
Types of Bonds
Government bonds are issued by the U.S. federal government to finance budget deficits, promote economic growth and national security, and pay for other government obligations like unemployment insurance and Social Security. Treasury bills are debt securities owned directly by the federal government (i.e., the U.S. Treasury). The U.S. Treasury gives investors a very high level of certainty that they will be paid back in full because they take their money from the government at maturity (at which point they are redeemed). These securities are often referred to as "T-bills" or simply "Treasury bills.
