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What is Bonds
Bond is a debt security that reflects the debtor obligation of the issuer to the owner of the security.

Bond is a debt security that reflects the debtor obligation of the issuer to the owner of the security.

Bonds are divided according to maturity:

  • Short-term bonds - with a maturity shorter than one year; they are traded on the money market. These include:
    • Treasury bills
    • Commercial papers
    • Deposit Certificates
  • Medium and long-term bonds - with a maturity longer than one year; they are traded on the stock market. These include:

Forms of bonds:

Valuation of bonds is based on the principles of net present value.

Use of bonds in practice: Subject as an issuer can use the bonds to raise additional funds. On the other hand, bonds can be used as a financial investment, if we want to evaluate the available financial resources. Investing in bonds is a relatively safe type of investment.

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Last update: 26.09.2016

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