Bonds are not redeemable to meet James Bond. Bummer…
(click on the bold-faced vocab words:))
Instead, Uncle Sam is starving. He needs me to spot him some $$. A bond is a more official version of spotting $$.
I’ll get my $$ back when the bond matures.
A bond’s coming of age story includes semi-annual coupon payments until Uncle Sam returns my $$.
Companies also sell bonds. Corporate bonds are thought to be riskier than government bonds. A company cannot directly control its revenue and cash flow like a government can (i.e. tax policy and printing $$).
If the American Government is unable to pay me back, most likely we will have bigger problems on our hands (à la alien invasion). A space helmet could be a fun new accessory though!
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)