In finance, the bond is a financial instrument that depicts the bond issuer’s indebtedness to the holders. It is a security of debt in which the issuer owes debt towards the holder. Depending on the contract terms, the issuer has to pay an interest. Also, the issuer has to ensure that he pay back the principal amount at pre-determined rate. This is known as the maturity date. Usually the interest would be payable at certain intervals (annual, semi-annual or monthly). The bond can be negotiated which mean the instrument could be transferred to another person in secondary market.
However, trading of digital currencies is a completely a different game. Here the speculation plays a major role and one can earn big money within a few weeks. It is an upcoming market and many people are still not aware such a market exists. Unlike, bonds which are there in the market from a long time. You can trade in digital currencies like bitcoin using the bitcoin code software.
Bonds are traded and bought by financial institutions like central banks, insurance companies, banks, etc. There are different varieties of bonds to choose from such as zero coupon bonds, fixed rate bonds, etc. The individuals who wish to own bonds can do so by buying the bond funds.
Advantages of owning bond funds
- Bonds have better advantage than other securities. Volatility of bonds is much lower than stocks (equities). Hence, it is considered as a safer investment option. It also suffers less from day-to-day volatility.
- Bonds are It is quite easy to sell a huge quantity of bonds without affecting the price of the bonds which would be quite difficult in case of equities.
- Bonds are comparatively attractive than stocks as they offer fixed payment of interest twice in a year and also the lump sum amount at the maturity date.
- Holders of the bonds enjoy a great deal of legal protection. If at all the company goes bankrupt, the bondholders will surely receive some amount of money while the equity stock of the company will end up being valueless. The bonds usually come along with indentures. It is a formal agreement of debt which establishes the bond issue’s terms and conditions. Also, it has covenants that are the clauses of the agreement. The covenants will specify the bondholder’s rights and the issuer’s duties. The actions that issuer is not allowed to conduct or the actions that the issuer is obliged to perform are written clearly in the agreement.