Definition of Bond


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Bond -- A certificate reflecting a firm's promise to pay the holder a periodic interest payment until the date of maturity and a fixed sum of money on the designated maturing date.

another definition...

bond -- a certificate that is evidence of a debt. The debt is initiated when the issuer sells the bond to the holder for a specific amount of cash. The issuer is obligated to pay the holder of the bond a fixed sum (the bond's face value) at a stated future date and to pay interest (usually twice a year) at a specified rate during the life of the bond. Bonds may be issued by corporations, the federal government, and by state and local governments as a means of raising funds in the capital markets. Bonds may be issued in registered form, in which the name of the holder is on record with the issuer, or in bearer form, in which the name of the owner is not registered and the bond is payable to whomever bears, or presents the bond to the issuer for redemption.

another definition...

Bond -- 1. A written undertaking to perform or refrain from performing specified acts, usually guaranteed by a third party.
2. A security evidencing debt, specifying the date payment is due and usually specifying a rate of interest and its dates of periodic payment.

historic definition...

Bond -- A certificate of obligation to pay money secured by mortgage or otherwise. A bond issued by a corporation (or by a municipality or government) is an interest-bearing debt certificate. The securities issued by a government are generally designated as bonds instead of stock. The securities issued by the United States government are designated as bonds, although formerly known as stock. Some of the securities issued by the city of New York are designated as stock ; but municipalities as a rule designate their. securities as bonds instead of stock. A coupon bond (as distinguished from a registered coupon bond) is one both interest and principal of which are payable to bearer. A registered coupon bond is one which bears the name of the owner and his name also is registered (recorded) on the books of the company issuing it, but the interest is payable to the bearer to the holder of the coupon, detachable from the bond, which calls for the payment of an instalment of interest when it has become due. A registered bond (not registered coupon bond) is one bearing the name of the owner. The name of the owner also is registered (recorded) on the books of the company issuing it and the interest payments are made by checks forwarded to the address of the owner. The chief features of these bonds are as follows : Prior-lien bonds are a lien ahead of all other bonds, but ordinarily cover or represent only a small part of the value of the whole property ; first mortgage bonds are issued under a mortgage which is first in lien, or in other words, takes precedence of mortgages subsequently created (sometimes there is a lien a prior lien ahead of a first mortgage) ; general (or "blanket") mortgage bonds are issued under a mortgage which is a first lien on everything not already mortgaged; consolidated mortgage bonds are issued under a mortgage which has superseded two or more other mortgages; second mortgage bonds are issued under a mortgage which is a second lien or a lien after the first lien ; equipment bonds are secured by mortgage on equipment; land grant bonds are based on grants of land and are retired by the proceeds of the sales of land; sinking fund bonds are bonds for the redemption of which a sinking fund is established ; collateral trust bonds are secured by pledge of collateral (stocks and bonds) ; adjustment bonds are as a rule issued to pay for improvements and generally rank as second mortgage bonds ; debenture bonds are promissory notes in the form of bonds ; participating bonds are debt certificates which receive interest at a varying rate as permitted by revenues; income bonds receive interest, if earned, before dividends can be paid on stock of the company issuing them (practically preferred stock) ; convertible bonds are bonds which are convertible into (exchangeable for) stock. The term bond also applies to an obligation in writing and under seal in which a person binds himself to pay to another a certain sum of money at a specified time. Also, to bond means to put under pledge or under forfeit in a penal sum.

About the author

Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".

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