Yield to Maturity: A Bond
A bond is a debt security that is usually issued by parties like companies or governments in order to raise funds to be used for particular purposes. A company borrows money from a certain group and in return gives assurance that it will pay the amount it borrowed plus interest on an earlier agreed time. In general then, a bond functions like an "IOU."In order to have a simple understanding of how a bond works, one only need remember these three terms: face or par value, coupon or interest rate...
6 min