A bond is a debt security, in which the authorized issuer – company, financial institution, or Government, offers regular or fixed payment of interest in return for the money borrowed by the said issuer. It is for a certain period of time
How do bonds work?
- When you purchase a bond, the authorized issuer borrows money from you for a fixed period of time.
- This money earns you a predetermined interest rate at regular intervals.
- The principal amount is repaid at the end of the maturity period.
How are bonds different from stock
- Bond holders are lenders whereas stock holders are owners in the firm/organisation/company.
- Bonds have a defined term of maturity while stocks have no fixed time period.
Securities investments are subject to risks. Please read the Offer Document/Prospectus, the issue terms and conditions, carefully before taking any investment decision.
Types of bonds
- Government bonds
- Corporate bonds
- Bank or other financial institution bonds
- Tax saving bonds