Bonds

Bonds are fixed-income instruments that represent a loan made by an investor to a borrower, typically corporate or governmental. They are used by companies, municipalities, states, and sovereign governments to finance a variety of projects and activities. When you purchase a bond, you are essentially lending Money to the issuer in exchange for periodic interest payments, known as coupon payments, and the return of the bond’s Face Value when it matures.

Examples of Bonds:

• Government Bonds: Issued by national governments, such as U.S. Treasury bonds, which are considered low-risk.
• Corporate Bonds: Issued by companies to raise Capital, such as Apple Inc. bonds.
• Municipal Bonds: Issued by states or local governments, often tax-exempt, like New York City bonds.

Cases:

• In 2008, the U.S. government issued bonds to stabilize the economy during the financial crisis.
• A Corporation may issue bonds to fund a new project or expand operations, such as Tesla issuing bonds for factory construction.
• Municipal bonds are often used to finance public projects like schools or highways, benefiting local communities.