bonds Flashcards
define bonds
a type of investment where investors lend money to the Uk govt in return receive interest at regular intervals .
are gilts considered as a safe investment?
yes but their values can fluctuate with interest rates changes
why are bonds issued
to help finance public spending
where do the govt issue bonds
primary bond market
what may a bond holder do if they need money again before the maturity date
resell the bond on the secondary bond market
what type of correlation is there between bond prices and yield
inverse as the bond price decreases the bond yield increaesi
why are a majority of govt bonds held by banks
because the majority of hot money fund are held in the banking system
what is an additional expansionary monetary policy measure the bank of england take
buying back bonds before maturity date adding liquidity to the banking system and increasing AD
