What is the Bond in Stock Market?
Hello friends, myself Laxman, today in this article we see what is the bond in the stock market and also its advantage and disadvantage. How we make money from it. What is the function?
let’s see in step by step:
What is the Bond:-
Bond is the financial instrument and also called the IOU. Bond is printed on fancy paper with a doodle around the border and the artwork at the top, but its purpose is the pure as the IOU purpose.
it’s is the record of that fact you have loaned money to someone else. It shows the amount of the loan and the deadline for that for paying it back. It gives an interest rate that the borrower has to pay. (What is the Bond in Stock Market)
When you buy a bond. it means you are not purchasing anything. you are simply making a loan. The seller of the bond is also called the issuer, is buying your money, and bond is the also prove that the deal has happened.
Advantage of Bond:- What is the Bond in Stock Market?
- A bond is a little riskier than a Stock
- getting regular interest on the bond
- when a company goes bankrupt you will pay first then the other people like stock-owned people.
- Bond gives average return when you got bonds maturity. (What is the Bond in Stock Market?)
The disadvantage of Bond:- What is the Bond in the Stock Market?
- When you sell the bond before maturity i.e. premature you get very less money than you pay for the bond. because the bond market also goes up and down so for that.
- When a company goes bankrupt you lose a lot of money.
- limited amount of money get in the form of interest but its bond is long years the inflation eat the all money and value of bonds and money.
- The biggest disadvantage is Inflation.
When you buy the bond first of all research that issuer(or company) to have the ability to pay the return our money.
Junk bonds:
The higher risk of bonds is also called junk bonds. They have the ability to lose your all money. this is about junk bonds we see in the preferred bonds article. (What is the Bond in Stock Market)
This is all about the What is the bond, its advantage, and disadvantage.
Learn How to Select Bond:- Click here