What are bonds?

Bonds are financial instruments issued by Governments and companies to raise money by borrowing from investors. Investors loan money to the issuer by purchasing the bond. Over the life of the loan they receive periodic interest payments, usually twice a year and at maturity the investor receive the face value of the loan. The bonds can be bought and sold on secondary markets which is why GO Markets lets you trade these products. The price of bonds will move around and tend to have an inverse relationship with interest rates. Increase in interest rates, decrease the value of existing bonds as newly issued bonds are offered with higher interest conversely when interest rates decrease, existing bonds increase in value as new bonds will have less attractive interest payments. Bonds issued by stable governments and bonds with a short maturity tend to have lower interest rates as the chance of them being paid back in full on time is high.

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