ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A bond’s term to maturity is the period during which its owner will receive interest payments on the investment. When the bond reaches maturity, the owner is repaid its par, or face, value.

Detailed explanation-2: -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.

Detailed explanation-3: -A corporate bond is a debt obligation issued by a business to raise money. Corporate bond buyers are lending money to the company, while the company has a legal obligation to pay interest as agreed to bondholders. When a corporate bond matures, or reaches the end of the term, the company repays the bondholder.

Detailed explanation-4: -The most significant sell signal in the bond market is when interest rates are poised to rise significantly. Because the value of bonds on the open market depends largely on the coupon rates of other bonds, an interest rate increase means that current bonds – your bonds – will likely lose value.