What is a government bond, and how do they work/function?
In: Economics
Well, there are many different types of bonds, but basically it is a way for the government to raise money now, with an obligation to pay it back later. It is a kind of loan.
You, the citizen, purchase the bond giving the money to the government which they use to fund various programs.
The bond typically has a fixed interest rate. For example, Savings Bonds (probably the most common kind), double their value over 20 years. Turn it in after 20 years and you get back double what you paid for it.
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