UTILITY BOND Meaning and
Definition
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A utility bond refers to a type of bond that is issued by utility companies, such as electric, gas, or water companies, to finance their operational and infrastructure projects. This bond acts as a debt instrument for the company, allowing it to raise capital from investors to fund various undertakings.
The primary purpose of a utility bond is to assure investors of regular interest payments at specified intervals and the return of principal once the bond matures. These bonds tend to be considered as relatively low-risk investments due to the essential nature of the services provided by the utility companies. As such, they are often seen as a safe option for conservative investors seeking steady income with minimal risk.
Utility bonds typically have a fixed interest rate that is determined at the time of issuance and remains constant throughout the bond's term. The interest rate is usually determined based on current market conditions and the credit rating of the issuing utility company. The principal amount of the bond is typically repaid upon maturity, which can range from a few years to several decades.
Investing in utility bonds can be attractive for individuals seeking stable income, as they offer regular interest payments and are backed by the utility company's assets and revenue stream. However, it's important to carefully assess the financial health and creditworthiness of the issuing utility company before investing in utility bonds, as their performance directly impacts the bond's value and the issuer's ability to fulfill its obligations.
Common Misspellings for UTILITY BOND
- ytility bond
- htility bond
- jtility bond
- itility bond
- 8tility bond
- 7tility bond
- urility bond
- ufility bond
- ugility bond
- uyility bond
- u6ility bond
- u5ility bond
- utulity bond
- utjlity bond
- utklity bond
- utolity bond
- ut9lity bond
- ut8lity bond
- utikity bond
Etymology of UTILITY BOND
The word "utility bond" consists of two key components: "utility" and "bond".
The term "utility" comes from the Latin word "utilitas", meaning usefulness or advantage. It entered the English language in the early 17th century, referring to the quality of being useful or beneficial.
The word "bond" also has Latin roots, deriving from "bonda", meaning a chain or binding, or "bonis", meaning goods or property. It evolved through Old English and Middle English, eventually developing into its current meaning of a legal or financial agreement or instrument.
When combined, "utility bond" refers to a specific type of financial bond issued by public utility companies to raise capital for their projects or operations. The bond represents a debt obligation that investors can purchase, and the utility company agrees to pay interest periodically and repay the principal amount at maturity. The term "utility bond" therefore signifies a financial instrument associated with utility companies.
Similar spelling words for UTILITY BOND
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