What are the various types of bonds?
A bond is a certificate promising to repay, no later than a specified date, a sum of money which the investor or bondholder has loaned to the company. In return for the use of the money, the company (or municipality or other government entity) also agrees to pay bondholders a certain amount of interest each year, which is usually a percentage of the amount loaned. Since bondholders are not owners of the company, they do not share in dividend payments or vote on company matters. The return on their investment is not usually dependent on how successful the company is. Bondholders are entitled to receive the amount of interest originally agreed upon, as well as a return of the principal amount of the bond, if they hold the bond for the time period specified. Corporate bonds generally are issued in denominations of $1,000. This is the face value of the bond, and is the amount the company agrees to repay to the bondholder when the bond matures. The prices at which bonds trade may differ fro
