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The bond market is by far the largest securities market in the world, providing many potential benefits to investment portfolios, including attractive returns, according to Pierre-Célestin Rwabukumba, Chief Executive Officer of Rwanda Stock Exchange (RSE).

 

Majority of investors locally and across the world are familiar with aspects of the market, but as the number of new products grows, a big percentage of the population is challenged to keep pace.

 

However, to further understand the complexities of this huge and diverse market, Doing Business breaks down the common basics; what is a bond and how can bonds help meet your investment goals?

 

 

In essence, a bond is a certificate issued by a borrower (a Company or Government) as evidence that the borrower owes the bond holder (creditor) a specified sum of money.

 

For the most part, governments, corporations and municipalities issue bonds when they need capital.

 

An investor who buys a government bond is lending the government money.

 

If an investor buys a corporate bond, the investor is lending the corporation money.

 

Like a loan, a bond pays interest periodically and repays the principal at a stated time, commonly known as maturity.

 

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