Questions On Basics On Bonds

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Basics on bonds Naranchimeg Tumurbaatar Webster University Abstract The purpose of this paper is give idea to individuals what is investing, how it is beneficial to them, specifically concentrated on how bond works, how to approach the bond market, and what should consider when purchasing the bond, because thousands of people wondering how they invest their money, where they should invest, and how the investing process works. It will be very helpful for the individuals who are first time investors. Financial Paper: Bond Bond is basically IOU according to Joshua; when you purchase a bond, company or government borrow your money in return they will pay you back certain interest rate in length of the time on the agreement Company…show more content…
Furthermore, bondholder can sell it before its maturity dates when investor needs money or it can be sold more than what it is purchased. As you can see, bond investment increases your capital and income with offering less risk (Esme). How and where bonds are issued and traded The process of issuing bond is very complex, because typically bonds do not directly involve issuers and public and involve large amount because of the sum. The process involves three main groups: issuers, underwriters, and purchasers (Chad). As I mentioned earlier, issuers are the corporations or government who sell the bonds and borrow money from investors. Underwriters are the, who act as an intermediary between issuers and investors, investment banks or other financial institutions that helps issuers to sell their bonds. The good examples are going to be major broker-dealer firms like Goldman, Merrill Lynch, Morgan Stanley, etc. Purchasers are the bondholders, who bought a bond and lend the money and purchase the bond. Not like a stocks, bond investors do not have an access to bond price right away. There is no such a thing that bond market is located in a building and shows all the prices and changes show on the display. Basically, bond market is combination of several numbers of extremely large bond dealers. The reason is there is no quoted price for the bond for trade and it happened over the counter not in exchanges. Major segments of bond According to Gitman and Joehnk,
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