The bond market, also known as the fixed-income market, is a financial market where participants can issue, buy, and sell debt securities, primarily bonds. Bonds are instruments used by issuers, such as governments, municipalities, or corporations, to raise capital. When an entity issues a bond, it is essentially borrowing money from investors who purchase the bond, agreeing to pay back the principal amount with interest at specified intervals until maturity.
The bond market is crucial for providing financing to a wide range of entities, facilitating public and private projects, and offering investors an opportunity to earn interest income and diversify their investment portfolios. Bond prices fluctuate based on interest rates, credit ratings, and overall market conditions. The market is divided into segments, including government bonds, municipal bonds, corporate bonds, and others, each with distinct characteristics and risks. The bond market plays a vital role in the overall economy by influencing interest rates and providing insights into economic trends and investor sentiment.
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