From the course: Corporate Finance Foundations
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Bond markets
From the course: Corporate Finance Foundations
Bond markets
- Remember, bonds are just pieces of paper, and shares of stock are just pieces of paper. Can I sell that piece of paper to someone else? Well, if there are stock markets, where shares of a company's stock are bought and sold, are there also bond markets? And if there are, can all the various types of bonds be traded on these markets? Well, first of all, there are various types of bonds. There are government bonds that are issued by countries. These are sometimes called sovereign bonds. The United States government has issued many, many bonds. There are also municipal bonds, sometimes called sub sovereign bonds, issued by cities or provinces or states or government agencies. These municipal bonds are ways for local governments to borrow money. Let's think about a city issuing bonds. If you buy those bonds, how do you know you're going to get paid back? Well, it's because the city exists. It can't run away and hide. You get the cash flows from the city. Now, there are also corporate…
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