What is a Bond? A Bond, simply put, is an IOU to you. The government or corporation you lent the money gave you a sheet of paper saying they would pay interest semi-annually at the rate of 6% annually. The principal is usually paid off at maturity. The corporation or government issuing the bond therefore guarantees the principle. You have no ownership in the company or government; however, you are first in line should they go belly up. Typically Bonds tend to be low risk and lower return. There are exceptions as with anything. |
