What is a bond?
Bond is a debt instrument where investors lend money to corporate or government entities for a defined period of time in return for a fixed or variable interest rate. Depending on where it sits in the capital structure, the yield also varies. The picture below shows a typical capital structure of a Company that borrows for its business. It ranges from Senior to Junior to Mezzanine then Equity. As you can see from the picture, the higher the protection it offers to investors, the lower the yield.
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