Bonds

The Issuing of IOU's - read our cartoon to find out more...

 

Definition:

A bond is a form of debt finance. It is basically an IOU issued by a company as a formal contract, promising to repay the lender the bond's value (known as the principal) at maturity. This can be anything from a few days to 20 or more years. Interest (known as the coupon rate) is paid to the bondholder at fixed intervals.

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Some terms you may want to find more about:

coupon, coupon rate, debt finance, barer instrument, securities, fixed rate, interest, debentures, maturity, yield, market value, face value, credit agency, high-yield, Junk-bond, mandate, underwrite, issuing, syndicate, bookrunner, investor