A bond is a debt instrument issued for a predetermined period of time with the purpose of raising capital by borrowing money from investors. Bond issuer promises to repay the principal and interest to investors periodically as compromised.


Common type of bonds

Corporate bonds: are issued by corporations or their subsidiaries.

Government bonds: are issued by the government and usually considered as low risk investments because of relatively lower probability of default.

Perpetual bonds: no fixed maturity date but pay a steady stream of interest forever.

Callable bonds: grant the issuer the right to redeem the bonds before it matures.

Convertible Bonds: gives its holder the right to convert the bond into shares of the issuing corporation according to predetermined terms during a conversion period or at conversion dates.



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