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bond

A form of investment that behaves like an interest only loan. The investor buys the bond for some amount, receives interest-only payments over time, and then receives the initial investment plus the final interest installment at the end of the term. Bonds are a typical means for government units to raise needed capital. Revenue bonds are secured by future revenue generated from the activity being funded, whereas general obligation bonds are secured by the issuing entity’s ability to tax.

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