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Business Basics: Bonds

April 2nd, 2014

 

Bonds are a debt investment where an investor, such as a bank, company or government, loans money to a company or government that borrows funds. The funds are borrowed for a determined amount of time and with a fixed interest rate. This interest is typically paid every six months, and the funds are to be returned at a set date, known as a maturity date.

 

Greece, along with the United States and many other countries, take out bonds as debt  builds over time. As May approaches, so does Greece’s €9.4 billion maturity deadline. Greece has been discussing a return to bond markets—the trading of debt securities. Although the stock market receives much attention, it is the bond market that is vital to both the private and the public business sectors.

 

– Information compiled by Katii Sheffield