TERM BOND Meaning and
Definition
-
A term bond refers to a type of bond that matures or is repayable at a specific pre-determined date, typically in its entirety. It is a fixed-income security that has a specified term or period of time until maturity, and the principal amount is repaid to the bondholder upon maturity. The term bond has a fixed interest rate, and interest payments are made periodically over the life of the bond.
The key characteristic of a term bond is that it has a fixed maturity date, unlike other types of bonds, such as serial bonds or callable bonds, which have varying maturity dates or options for early redemption. Term bonds are generally issued by governments, municipalities, corporations, or other entities to raise capital for specific purposes. They are often used for infrastructure projects, such as building highways or bridges, where the issuer needs a specific amount of funding for a predefined period.
Investors who purchase term bonds receive regular interest payments and can expect the return of their principal investment upon the bond's maturity. The interest rate on a term bond is typically determined at the time of issuance and remains fixed throughout the life of the bond. The interest payments are usually made semi-annually or annually. Term bonds are considered relatively safe investments since they provide a fixed income stream and the principal is guaranteed upon maturity, assuming the issuer does not default.
Common Misspellings for TERM BOND
- rerm bond
- ferm bond
- germ bond
- yerm bond
- 6erm bond
- 5erm bond
- twrm bond
- tsrm bond
- tdrm bond
- trrm bond
- t4rm bond
- t3rm bond
- teem bond
- tedm bond
- tefm bond
- tetm bond
- te5m bond
- te4m bond
- tern bond
- terk bond
Etymology of TERM BOND
The term "term bond" comes from the combination of two words: "term" and "bond".
- "Term" originates from the Latin word "terminus", meaning boundary or limit. It later evolved into Old French as "terme", referring to a stipulated period of time or duration. In English, "term" refers to a fixed or limited period.
- "Bond" derives from the Old English word "bonda", meaning a binding, a thing that binds, or a restraining tie. This word further traces its roots to the Old Norse word "böndi" and Old High German word "bant", both denoting a "householder" or "peasant". Over time, "bond" acquired the specific meaning of a legal agreement or contract that binds parties together.
Combined, "term bond" refers to a specific type of bond or borrowing instrument with a fixed term or duration.
Infographic
Add the infographic to your website:
