Bonds are long term debt instruments mostly issued by the government and corporate bodies. When they wish to borrow money from the investing public, usually on long term basis, they do so issuing or selling debts securities that are referred to as Bonds.
Now, why Bonds;
1. Unlike investing in shares, the investor is always aware of his returns before the investment.
2. An investor in bonds have a priority claim to earnings and assets over shareholders. In event of liquidation, bondholders must be repaid before shareholders.
3. Owning bonds is considered to be less risky than shares.
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