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Bond

A bond is a loan you give to a government or company in exchange for periodic interest and principal at maturity.

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8 months ago

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Definition

A bond is a debt security where an investor lends money to a government or company in exchange for periodic interest (coupon) and full principal at maturity.

Key Takeaways

  • Pays coupon (fixed/floating) and returns principal at maturity.

  • Bond prices move inversely to interest rates; longer duration = bigger swings.

  • Credit quality matters (FGN vs corporate).

  • Naira bonds vs Eurobonds (USD) add FX exposure.

  • Buy via auctions/offers, NGX secondary market, or bond funds/ETFs.

Nigeria Example
Buy a ₦1,000,000 FGN bond at 13% (semi-annual). You receive ₦65,000 every six months and ₦1,000,000 at maturity (assuming no default).

Mini-FAQ

  • Is principal guaranteed? Only as strong as the issuer’s credit.

  • Why did price fall? Market rates likely rose (duration effect).

  • Best for beginners? FGN/FGN Savings Bond or a bond fund.

Related Terms: Coupon · Yield to Maturity · Duration · Treasury Bill · Sukuk · Eurobond · Primary Market · Secondary Market

is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst with over 20 years of experience in global financial markets. Olukoya is a published contributor to Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, InvestorPlace, and other leading financial platforms. He is widely recognized for his in-depth market analysis, macroeconomic insights, and commitment to financial literacy across emerging economies.

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