Bonds

Bonds - An introduction

Level: Beginner / Length: 20 minutes / Pages: 18
In this first module about bond trading you’ll be given a broad understanding of the bond market. You’ll look at those people and institutions that issue bonds as well as what bonds are actually used for.

Why are Bonds issued? Through a series of simple videos you’ll learn about how Bonds are used.

You’ll explore key terms such as ‘yield to maturity’ and ‘coupon’ in order to enhance your understanding of Bonds.

Bonds are one of the oldest types of financial instrument in the world and also one of the easiest to understand. In essence, a bond is an IOU where the borrower (called the issuer) borrows money from a lender (the investor) and agrees to pay interest in return. Bonds are interesting because their value is often determined by global events. For example, bonds issued by a very safe and stable country (like Germany) only carry a very low rate of interest. On the other hand, a country without that stability – at war, a government mismanaging state finances etc - will find that investors will demand a higher price (interest rate) to lend them money. In this course you’ll learn about:

  • How corporations and countries use bonds
  • The structure of a bond
  • Bondholders vs stockholders
  • The meaning of key terminology associated with bonds