Category: Beginner Markets October 16, 2024

Bond Trading

Bond trading is the process of buying and selling bonds, which are debt instruments issued by governments or corporations to finance their projects or cover their expenses. When you purchase a bond, you are lending money to the issuer (the government or company) in exchange for interest that is paid to you over a specified period until the bond matures, at which point the principal amount is repaid.

Types of Bonds

1. Government Bonds:
   • Issued by governments to finance public projects.
   • Generally considered safer, such as U.S. Treasury bonds.
2. Corporate Bonds:
   • Issued by companies to raise funds.
   • Carry higher risks than government bonds but offer greater returns.
3. Municipal Bonds:
   • Issued by local or regional governments.
   • Often exempt from taxes.
4. Convertible Bonds:
   • Allow the bondholder to convert the bond into shares of the issuing company.

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