Bonds
If you are planning to get involved in stock markets, then one term that you should be aware of should be bonds. Bonds may work look like stocks, but remember that bonds are totally different and very distinct from stocks.
Simply put, what is referred to as the bond is simply a loan and you are the lender. The borrower in this case can be any entity; usually the borrower can be the government, a multinational company, a state, a province or an up and coming company. These entities all share the same need, and that is the need to money in order to oil their production and operation and this is the main motivation why these entities borrow capital from the public by issuing public bonds. When the bond is issued in the market, the price that you will pay for is called the face value. And once you make a decision to buy the bond, then the issuer promises that you will pay back on the set date that is known in the market as the maturity date, and at a pre-determined rated of interest called as coupon.
Others may think that the stocks and the bonds are the same or at least have the same characteristics. Let it be known that the two are different and both have distinct characteristics. The stocks and the bonds are two different apples in a sense that the stocks make no promises about the dividends or the returns. The bonds on the other hand will deliver a regular amount at the end of the year. Here is one simple example; say you buy a bond with a $100 face value, a 10 percent coupon and for a 10 year maturity. What this means is that you get to collect $10 for each of those 10 years and after 10 years you will get back your $100.
