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Article: Bonds
- Article from:
- West's Encyclopedia of American Law
CopyrightCOPYRIGHT 2005 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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BONDS
Written documents by which a government, corporation, or individual
—
the obligor
—
promises to perform a certain act, usually the payment of a definite sum of money, to another
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the obligee
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on a certain date.
In most cases, a bond is issued by a public or private entity to an investor who, by purchasing the bond, lends the issuer money. Governments and corporations issue bonds to investors in order to raise capital. Each bond has a
par value
, or face value, and is issued at a fixed or variable interest rate; however, bonds often can be purchased for less or more than their par value. This means that the yield, or total return on a bond, varies based on the ...