Question

State the features of Bonds.

Answer 1

Features of Bonds are as follows:

1. Nature of finances: A bond is a debt or loan finance. It represents long term finance of the company.
   Generally, the bonds are issued for a long period. For instance, 5 years, 10 years, and so on.
2. Status of investor: The bond holders are the creditors of the company. Being creditors and non-owners, they do not enjoy any voting rights.
   They are not entitled to participate in general meetings and in the management of the company.
3. Return on bonds:
   Bonds are issued bearing a fixed rate of interest. So, the bondholders get a fixed rate of interest.
   It is payable at regular intervals, but it may be paid on maturity also.
4. Repayment: Bonds have a specific maturity date because a bond is a formal contract to pay the borrowed money. Thus, the repayment of the principal amount is due on the maturity date.