Bond

An IOU issued by a borrower to a lender. Bonds usually take the form of *fixed-interest securities issued by gov­ernments, local authorities, or companies. However,  bonds come in many forms: with fixed or variable rates of interest, redeemable or irredeemable, short- or long-term, secured or unsecured, and marketable or unmarketable. Fixed-. interest payments are usually made twice a  year but may alternatively be credited at the end of the agreement  (typically 5 to 10 years). The borrower repays a specific sum of money plus the face value (PAR) of the bond. Most bonds are unse­cured and do not grant shares in an orga­nization (see DEBENTURE). Bonds are usually sold against loans, mortgages, credit-card income, etc., as marketable securities. A discount bond is one sold below its face value; a premium bond is one sold above par. See also INCOME BOND; PREMIUM BONDS.