What Are Bonds? Explained In Simple Words! (#29)

What Is A Bond In Simple Words?

A Bond is a legal Document provided to you by a Company's/Business's owner, while making sure to pay you back the money with interest & at a fixed time, which the Company/Business owner, owes to you.

A Simple Example Of Bonds:

Let's say your friend is about to start a Business or a Company & needs money for it.

Now, he/she does not have enough money to start a company; so your friend came up to you & asked for a little help. & you do helped your friend.

Well, now as you've paid the money then you are handed over a document by your friend.... & that document ensures that you have given money for that business growth & therefore the owner have received it & will give the amount back at a specific date with Interest.

I know there wasn't a need to ensure anything or there just wasn't the document required as of YOUR TRUST WORTHY FRIEND is the one who owes money to you. But still we are talking 'bout how things work in the Business World....you know!

There wasn't a requirement to say so but still.... Just Saying!

& for your kind information it's not important that you can only get Bonds from your family or friends, instead you may invest in any Business providing Bonds to you.... so any Business you like.... after studying how much can you make/get.... in/as Interest.... & ofcourse you've gotta look at other details & Business factors, too.... to ensure that its a save Investment.

Well, Bonds are Assets but they were also invented to avoid fraud cases.

These are some basic things mentioned in "Bonds" Document .... :

Amount of money given

Amount of money to return (with interest & at what Interest Rate....)

On which date will the Business owner pay back

etc. etc.

Well, we can also say that Bond's are similar to as of the owner is taking a loan. Right?

Controversial! But, that's what I think!

Anyways, so this is a simple example &/OR Explanation of/about "BONDS"!

Ok, well, I've got something for y'all....

So, as of you were the person in the example to buy BONDS from your Friend!

Can You Answer This Interesting Question:-

Do You Know, where will your money be counted in the BALANCE SHEET?

Hurry Up!

FEEL FREE TO LEAVE A COMMENT!

I know it's kinda related to Accounting, but still try to answer it.

COMMENT IF YOU KNOW THE ANSWER Or IF YOU THINK YOU KNOW IT....!

IT'S OKAY IF ITS WRONG!

All The Best!

Alright so now let me tell y'all the answer....

Well in the section of the, Owners Equity/Shareholders Equity.... is where your Investment OR your Contribution to the Business.... is gonna show up!

So BONDS can also be stated/termed as Long Term Investments. Right?

However, it is a useful Asset because it do make one earn profit.

But, the stocks do it as well. Right?

So, Investing in which one is better.... Bonds Or Stocks?

So in the next article we'll be doing the comparison among the 2 (Stocks & Bonds) &'ll know which one is better!

So STAY TUNED!

& just in case if you are reading this article/blog after it've been already published. So here's the link....

Anyways,

Thanks For Reading!

Comments

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