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What
are Bonds?
(From the U.S. Securites
and Exchange Commisison)
A bond is a debt security, similar to an IOU. When you purchase
a bond, you are lending money to a government, municipality, corporation,
federal agency, or other entity known as the issuer. In return for
the loan, the issuer promises to pay you a specified rate of interest
during the life of the bond and to repay the face value of the bond
(the principal) when it "matures," or comes due. In contrast
to bondholders who have IOUs from the issuer, shareholders are owners
of the company they purchase.
There are many different kinds of bonds, including:
U.S. government securities, municipal bonds, corporate bonds, mortgage
and asset-backed securities, federal agency securities, and foreign
government bonds.
The Bond Market Association has basic information
for investors, including An Investor's Guide to Corporate Bonds,
An Investor's Guide to Municipal Bonds, and useful tools for determining
prices and yields for municipal and other bonds. The federal government
also issues a variety of debt securities, including Treasury bills,
notes, and bonds. For information about buying and selling Treasury
securities, visit the website of the U.S. Department of the Treasury’s
Bureau of the Public Debt.
Visit
http://www.sec.gov/answers/bonds.htm
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