The supply of bonds in the bond market increases; the demand for funds in the loanable funds market increases.
What is bonds ?
- Bonds are formulated when governments and companies want to increase money.
- By purchasing a bond, you are making a loan to the issuer, and the issuer agrees to repay the face value of the loan by a specified date, and usually he will make two periodic payments a year. pay interest.
- Bonds are generally considered safer than other financial assets such as stocks, and provide a reliable return unless the issuer defaults.
- There are different types of bonds with different payment terms and minimum investment amounts.
- In return for purchasing a bond, an investor or bondholder receives periodic interest payments known as coupons.
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