Was playing Red Dead 2 and the gang comes into some Bonds. Apparently they’re worth money but idk how the gang gets a profit from it, or how bonds work in civilian life.
In: Economics
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It’s a loan, with a different type of pay structure.
– I give you $100.
– You give me a $100 bond with 12% for a term of 1 year(or whatever).
– You pay me $1 each month as an interest payment.
– At the end of the 1 year, you give me my original $100 back, all at once.
Meanwhile, during the year, at any point, I can sell that bond back to you or someone else at an adjusted rate based on how much time is left on the term.
They are bearer bonds. Bonds are loans investors give out to institutions (banks/governments etc) with the promise that they’ll get their money back with interest. Bearer bonds, as the name suggests, are anonymous. Normally an investor’s investment in an instrument would be recorded and visible to institutions but with bearer bonds the owner of the physical bonds is the presumptive owner to whom the money is paid out if they take those bonds to the issuer. So basically stealing bonds was like stealing cash but even more untraceable than cash.
Bearer bonds were popular because they afforded anonymity but they could also very easily be abused for money laundering. At the time they caught on the need for money by the issuers was greater than their commitment to transparency in such transactions but nowadays bearer bonds are no longer issued for obvious reasons.
Bonds are sheets of paper that are issued for fixed amounts. Loads of people here mention interest, but they don’t need to. Loads mention governments, but they don’t need to. Modern bonds are issued by governments and always include interest, but they don’t have to.
Bonds can been issued by just about any organisation. Pre paper money and especially pre cheques, they were ways of transporting money. It was a nightmare lugging around a load of gold/silver. So banks and companies issued bonds. There were two types. One with a name, one without. The ones with names could only be redeemed by the persons who’s name was on it. The others were called bearer bonds because whoever had it could cash them in.
so if you wanted to transport 50,000 dollars from New York to San Francisco, you do it in the form of bonds.
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