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A bond is simply an IOU. It is an agreement under which a sum is repaid to an investor after an agreed period of time.
A bond can be issued by anyone but is usually issued by governments (see gilts ) or public companies to repay money borrowed.
These loans normally repay a fixed rate of interest over a specified time and also repay the original sum at par in full after an agreed period - when the bond matures.
Last Updated: May 2007 © Moneyextra.com
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