Bonds are a way to generate additional income

Bonds are securities that certify the fact of receiving a loan by the issuer from an investor who is entitled to a regular dividend fixed income, and after their repayment - to the amount of the nominal value. The economic essence of these bills is similar to lending. We can say that bonds are a debt receipt received by an investor from a borrower in exchange for his money.

Enterprises issue securities, attracting the flow of funds for their development. Each of them has different denominations and favorable terms. Proceeding from this, it can be concluded that the buyer is previously acquainted with the future income, and a legal entity with its costs. The process of transferring the right to the creditor has been simplified as much as possible, and there is no need to file a pledge. In general, the purchase of securities has an average or long term of validity - from one year to thirty years. Issuers start issuing bonds into circulation when they can afford to take money on credit. At the same time, they should have predicted incomes for the future, at the expense of which the debt will be repaid in time, and also be strong economically.

Issue of bonds is carried out on the borrower's need, in order to obtain additional material resources for various social programs, modernization of the production process or introduction of innovative technologies. There is a significant detail, according to which stocks and bonds are distinguished. This is a stable income received by the investor from a note for a certain period of time and loss of its value at the time of repayment. Another important detail is that the owner of the bond only finances the issuer's activity, having fully paid, but has no rights to take part in the management. Securities have a fixed income, which is indicated on the blank of the special certificate. Interest in calculating cash is called a coupon rate. It can be floating or permanent, depending on the type of bond. These can be special coupons, through which interest is paid annually or quarterly, depending on the conditions for issuing notes. The income received in this way is called the coupon of the bond.

His example can be called all known bank deposit. Bond trading and they themselves have many kinds and classifications. Therefore, each individual case is best considered, guided by the list of securities, legally fixed by a certain state. Beginners ask themselves the question: "Where do you buy bonds?" This can be done in several ways: to buy in over-the-counter trades, through a bank, an investment fund or a brokerage company. For direct purchase of securities, you need to contact any stock exchange. You can access the purchase by having a special account and a trading terminal. For a wider perception of this topic, I recommend that you get acquainted with what bond evaluation is .