Question

What is a bond? Who issues bonds and why? Who buys bonds and why? Explain it briefly

Answer 1

what is a bond?

"A Bond is a fixed-income instrument that represents a loan made by an investor to a borrower (usually corporate or government).Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations".

who issues bonds?

A bond represents a promise by the borrower to pay the lender the principal and usually the interest on a loan. The bonds are issued by governments, municipalities and companies

who buys bonds and why?

the people who are willing to invest their money in less risky and fixed income area are usually buying the bonds

following are the reasons for buying bonds:-

1.Income

The primary investment reason to buy a bond is for the income.

2.Safety

All investments have risks, but bonds are generally considered less risky than stocks.