Q. What's a bond?
A. Nothing more than an IOU. If a school district issues bonds, it's borrowing cash and promising to pay it back at a certain rate of interest.
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Bond investors receive regular interest payments from the issuer at what is called the "coupon rate." For example, a $1,000 bond with a coupon rate of 10% generates payments of $100 per year. When the bond matures -- after perhaps five, 10, or 30 years -- investors get back their initial loan. |
