SIMPLE BOND Meaning and
Definition
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A simple bond refers to a debt security issued by a government or corporation that promises regular interest payments to the bondholder and the repayment of the principal amount at maturity. It is considered a basic and straightforward type of bond, offering a fixed, predetermined interest rate to investors.
Usually, a simple bond has a fixed term, or maturity, ranging from a few years to several decades. Throughout its term, the bondholder will receive periodic interest payments, typically semiannually or annually, based on the bond's face value and interest rate. These interest payments are regarded as the bondholder's return on investment.
Upon the bond's maturity, the issuer is obligated to repay the bondholder the full face value or principal amount originally invested. The value of simple bonds can fluctuate in response to changes in interest rates and the issuer's financial stability. However, if held until maturity, the bondholder will receive the full principal amount as promised, regardless of market fluctuations.
Investors are attracted to simple bonds as they provide a reliable income stream and offer more stability than riskier investment options. The interest rates on simple bonds are typically determined based on factors such as prevailing interest rates, creditworthiness of the issuer, and the term of the bond. Bondholders may also have the option to sell their bonds on the secondary market before maturity, although the price received may be higher or lower than the initial investment.
Common Misspellings for SIMPLE BOND
- aimple bond
- zimple bond
- ximple bond
- dimple bond
- eimple bond
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- sumple bond
- sjmple bond
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- sinple bond
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- simole bond
- simlle bond
- sim-le bond
- sim0le bond
- simpke bond
Etymology of SIMPLE BOND
The term "simple bond" is derived from the combination of two words: "simple" and "bond".
- "Simple" originates from the Latin word "simplus", meaning "single", "uncomplicated", or "without duplicity". It entered the English language in the late 13th century.
- "Bond" comes from the Old English word "bonda", which referred to a peasant or householder. Over time, its meaning evolved to represent a binding agreement or contract. The term has its roots in various Germanic languages.
When the words "simple" and "bond" are combined, "simple bond" refers to a basic or straightforward type of financial bond, typically involving fixed payments over a specified period.
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