BU111 Lecture Notes - Lecture 22: Canada Savings Bond, Bearer Bond, Debenture
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Represents debt lending by investors, a written promise to pay the lender the sum + interest. When you buy a canada savings bond, you are lending the government money. (owner = lender) when a company issues bonds, it agrees to repay the debt (principal) at some point at the maturity date. The value of principle to be repaid is the face/par value which is usually in denominations. Characteristics of a bond: fixed rate of return (often paid semi-annually) x number of years from now, they will pay you x amount back that you lent them. In the meantime, they will pay you an interest of xx (coupon payment of the bond). The annual interest is the fixed rate of return, and this doesn"t change: fixed term: principal repaid at maturity. The maturity date is the date that the company is supposed to pay you back.
