Money in Real Life · 45 sec
Bond (finance)
A practical idea for making clearer everyday money decisions.
The useful idea
- The useful idea
In finance, a bond is a type of security under which the issuer (debtor) owes the holder (creditor) a debt, and is obliged – depending on the terms – to provide cash flow to the creditor; which usually
- How it works
consists of repaying the principal (the amount borrowed) of the bond at the maturity date, as well as interest (called the coupon) over a specified amount of time.
- Why it matters
The timing and the amount of cash flow provided varies, depending on the economic value that is emphasized upon, thus giving rise to different types of bonds.
Why this matters
Use Bond (finance) to compare the trade-offs before committing money.
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Use Bond (finance) to compare the trade-offs before committing money.
Test your recall
Which idea belongs to the explanation of Bond (finance)?
- The useful idea — correct
- How it works
- Why it matters
In finance, a bond is a type of security under which the issuer (debtor) owes the holder (creditor) a debt, and is obliged – depending on the terms – to provide cash flow to the creditor; which usually
General education only — not personal financial advice.