Bonds Basics
A bond is nothing more than a loan for which you are the lender.
The organization that sells a bond is known as the issuer.
You can think of a bond as an IOU given by a borrower (the issuer)
to a lender (the investor). Of course, nobody would loan his
or her money for nothing. The issuer of a bond must pay the
investor something extra for the privilege of using his or her
money.
This "extra" comes in the form of interest payments,
which are made at a predetermined rate and schedule. The interest
rate is often referred to as the coupon. The
date on which the issuer has to repay the amount borrowed (known
as face value) is called the maturity
date. Bonds are known as fixed income securities because
you know the exact amount of cash you'll get back if you hold
the security until maturity.
The bonds currently in the market are Government bonds. As
the market develops, we expect to see the emergence of corporate
and municipal bonds.
Please feel free to contact our bond dealers on 2715490-4 for
further information.
