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Bond Flavors: Types of Bonds

Bond Flavors: Types of Bonds

The piece of paper you get when you buy a bond has an interest rate attached to it. Let's say it says 8%. That 8% is the coupon of the bond. The coupon is not coincidentally named like the things you clip from cereal boxes for 28 cents off your next load of ultra-mega-super-high-fiber bran cereal. The coupon on the bond acts analogously, and in fact, in the olden days of your grandparents, bonds commonly came with paper coupons that were clipped with a pair of sharp scissors and snail mailed...

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