What Is a Bond?

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Part of the video series: Finance & Investment Tips

Summary: Bonds are government-issued shares that are purchased by an investor with the agreement that the principle and interest will be paid off at a later date. Understand more about government-issued bonds, including junk bonds and triple A bonds, with tips from a registered financial consultant in this free video on finance and investment.

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By Patrick Munro
eHow Presenter

Contact: www.northstarnavigator.com

Patrick Munro's affinity for investing and financial matters began more than 20 years ago with business education and service throughout the ranks of the banking, insurance and...read more

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"This is financial adviser Patrick Munro discussing, what is a bond? Really a bond in a simple point of view is an I owe you. Governments have bonds, they issue bonds. Both Federal, State and Municipal. These IOUs are whereby, their entity puts up shares of it's overall practice to the investor. And agrees to pay an interest rate at a future date. If the investor will only give money no, to invest in the bond. Bonds have a very historical past. we had war bonds during the First and Second World War. Where Americans would invest in and give their money for the purpose of winning the war. Bonds have become very sophisticated in recent times. We also have commercial grade bonds. And they have various ratings. Ranging from junk bonds, all the way up to triple A bonds. And of course, the higher the grade of bond. The lower the interest rates, surprisingly. In fact, if you take more risk. As in a junk bond. You can ultimately earn more interest. This is Patrick Munro, discussing the term bonds."