What is Bonds?

Bonds may be defined as marketable long-term debt obligations of the issuers. Each issuer undertakes to repay the face value at the end of the stated redemption (maturity) 2 period of the bond, plus interest at specified intervals or at the end of the period, and the interest rate may be fixed or floating.

The holder of a bond has a claim on the assets and revenue of the issuer in the event of bankruptcy. This means that the corporate bondholder has a prior claim on assets in relation to equity. In many cases the bond certificate states that the holder has such a claim.