Bond is a negotiable instrument evidencing indebtedness. It is like unsecured debt Bonds which are generally issued by the Government or its agency (RBI) or the Company.
Process for Bonds:
(a) A Bond issuer takes money from the Bond Investors.
(b) In exchange of such money, the issuer issues a certificate in favour of Investor and promises to pay loan amount on maturity date.
(c) The Certificate that is known as Bond carries fixed rate of interest.
In other words, Bond means a debt instrument in which an investor loans money to the Corporate/Govt. that borrows the funds for a defined period of time at a fixed interest rate.
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