There are two fundamental types of investments, 1.Bonds 2.Stocks
If anybody wants to start your own business He will need a capital amount as capital. He takes the requisite funds from a family friend and write down a receipt of this loan ' I owe you Rs 50,000 and will repay you the principal loan amount plus 7% interest'. Your family friend has just bought a bond (IOU) by lending money to your company.
When you invest in bonds, the bond you buy will show the amount of money being borrowed i.e. face value, the interest rate i.e. coupon rate or yield that the borrower has to pay, the interest payments i.e. coupon payments, and the deadline for paying the money back is maturity dates.
There are several Benefits and Non Benefits to investing in bonds
Sunday, April 5, 2009
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