ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -For a fixed rate bond purchased at par, there are three sources of return: Receipt of the promised coupon and principal payments. Reinvestment of coupon payments. Potential capital gains (or losses) on the sale of the bond prior to maturity.

Detailed explanation-2: -In return for buying the bonds, the investor – or bondholder– receives periodic interest payments known as coupons. The coupon payments, which may be made quarterly, twice yearly or annually, are expected to provide regular, predictable income to the investor..

Detailed explanation-3: -The composite rate for I bonds issued from November 2022 through April 2023 is 6.89%.

Detailed explanation-4: -A bond is a debt obligation, like an Iou. Investors who buy corporate bonds are lending money to the company issuing the bond. In return, the company makes a legal commitment to pay interest on the principal and, in most cases, to return the principal when the bond comes due, or matures.