In our episode of debt, we had briefly touched on the definition of bonds and their creditworthiness. Just to go over it again and in laymen’s terms – a bond is simply a loan to a company or even the government, in which the investor will receive a fixed rate of return on that loan. So, in essence, bonds work by paying the “coupon rate,” which is that fixed interest payment that we talked about.
In our episode of debt, we had briefly touched on the definition of bonds and their creditworthiness. Just to go over it again and in laymen’s terms – a bond is simply a loan to a company or even the government, in which the investor will receive a fixed rate of return on that loan. So, in essence, bonds work by paying the “coupon rate,” which is that fixed interest payment that we talked about.