According the
bonds definition a bond is a security and a debt instrument that yields a fixed return over a period of time and can be traded in the market like any other security. A bond is essentially a loan that the issuing organization takes from the investor who becomes the creditor of the issuing organization in this case. Bonds typically have a lock-in period or maturity period during which they cannot be normally traded for full liquidity unless specified otherwise. Bonds are not non-negotiable instruments. The rate of return offered by bonds is low and fixed as compared to equity investments because bonds offer security against turbulent markets. The returns are disbursed periodically, usually twice, thrice or quarterly depending on the issuer’s offer.
The essential difference between a bond and a stock is based on sound principles. For instance, a bond is basically a loan, which the issuing organization takes from the investor. In other words it is a debt, which the investor buys from the issuing organization and consequently becomes its creditor. A stock on the other hand is a share of the issuing organization’s ownership and is its equity, which the investor owns when he buys it. The difference in the respective returns of bonds and stocks are ideally a matter of perspective. Bonds offer lesser returns for very low risk while stocks offer higher returns for higher risk.
| Bonds (Definition, Types and More.....)
|
|
|
|
