Bonds or securities in many ways similar to loans or debt. When someone buys bonds, he actually lend money to the city government, corporate bodies, federal or other entity that has issued bonds. Here, people who have bought bonds with the lender, while the bond issuer is the borrower. In exchange for loans or debt, the issuer promises bondholders.
Investors who view the bonds as the main element of your financial plan. This is because the bonds are long term investments which have a predictable stream of payments, payment of principal and interest secured by. Therefore, people consider them to preserve and increase their capital without greater risk. Investing in bonds is very useful when you’re saving for retirement or their children’s education.
A financial market, in which the purchase and sale of bonds occurs, referred to as the Bond Market. Since 2006, the estimated value of the international bond market is $ 45 billion. Unlike the market value of bonds and commodity markets in several countries have decentralized such as trade in places that are less common financial exchanges. However, in the U.S., the bond market is really focused. NYSE is the largest centralized bond market in the world, who represent the majority of corporate bonds. U.S. bond market size in 2006 was $ 25,200,000,000,000.