What is the definition of a government bond?
Bonds are security debts that are issued by a borrower to a lender for the purpose of paying back the debt with interest. Government bonds are federally incurred debts issued to lenders that are backed by the United States Treasury.LoansWhen broken down to its basic meaning, a bond is nothing more than a loan. What separates a bond from a regular loan in this case is the fact that the government issues the bond and many people consider the government to be a low-risk investment.PurposeThe government borrows money to operate the federal government and to help account for the current debt. One of the ways in which the government funds programs and carries out its duties for the citizens of this country is with the use of bonds.FeaturesEach government bond has a term limit and when it matures (or the time expires), the government pays back the lender. The bond normally pays interest during the time period before it matures. The rates are low because of the governments credibility.TypesThe
