A Little Bit About Investing in Stocks and Bonds
Companies and governments issue bonds to fund their day-to-day operations or to finance specific projects.
When you are investing in stocks and bonds, you are loaning your money for a certain period of time to the issuer. The bond issuer promises to pay you interest every year and return your principal at “maturity”. The length of time to maturity is called the “term.”
A bond’s “face value”, or price at issue, is known as its “par value.” The “par value” is the amount of money the borrower must return to the lender at the end of the loan. The amount of interest the bond holder will receive expressed as a percentage of the par value is known as its “coupon”.
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