GENERAL KNOWLEDGE

Detailed explanation-1: -Bond insurance, also known as “financial guaranty insurance", is a type of insurance whereby an insurance company guarantees scheduled payments of interest and principal on a bond or other security in the event of a payment default by the issuer of the bond or security.

Detailed explanation-2: -Surety bonds are a contract or a three-way agreement that are guarantees of payment, which insurers issue. The surety (insurance companies/banks) provides the financial guarantee to the obligee (government) that the principal (contractor) will fulfil their obligations as per the agreed terms.

Detailed explanation-3: -Financial guarantee insurance provides investors in debt securities with guaranteed payment of interest and principal in the event that the issuer of the guaranteed (“wrapped”) debt is unable to meet its financial obligations.

Detailed explanation-4: -There are different kinds of guarantees like bid bond guarantees, performance guarantees, advance or deferred payment guarantees and financial guarantees.