# Bonds ## Basics - A legal "contract" to borrow from public markets - Guaranteed periodic interest payments (*coupon*). Missed payments will force Bankruptcy. - Guaranteed repayment of original sum (principle, or *face value*) in full on a stipulated date (*maturity date*). - Issued by corporations, non-government entities (i.e. universities), and governments.  ## Issuing - A complex process. - Sums are large. - Brought to market through *Underwriter(s)* (the banks) - Sold OCT (Over-the-Counter), also traded on secondary market. - Par = issuing price (usually $1k), also value at maturity. ## Interest Rate - Interest rate environment in Global Economy, e.g. **Fed Funds Rate** reacting to inflation or recession, risk-free rate, etc. - [[rating|Credit rating]]/worthiness of issuers -- bonds that are more risky must offer higher interest rates - Duration of the Bond (loan)