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Investor Education

What Is Bond And Fixed Income?

A bond is a debt security issued by a borrower who intends to raise funds. Therefore, a holder of this debt is owed the amount that binds the borrower to it with several variations of collateral or conditions that are specified to be met by the borrower.
In Malaysia, bonds are issued by the Malaysian Government, corporations, financial institutions, government agencies or sometimes specifically structured vehicles.

The features of a bond include its nominal amount, price, issue date, maturity date and a fixed or floating coupon if there is one. Other examples of optional features may include but not limited to a guarantee (explicit or implicit), collaterals, charges, financial conditions and a rating. These bonds or fixed-income securities (a term commonly used interchangeably) are traded in the Malaysian financial system amongst banks, corporations, other financial institutions like insurance companies, government agencies like pension funds and unit trust companies. The underlying purpose is to invest in an instrument that provides a given yield for a given period of time-based on interest rates, credit, liquidity and economic conditions to meet the investor’s objectives.