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Trading Bonds: How to Invest in Bonds

Companies and governments issue bonds as a kind of debt security to raise money. When you purchase a bond, you are essentially lending money to the issuer in exchange for a fixed rate of return, known as the coupon rate, over a set period of time. The coupon rate is the amount of interest that the bond pays to the bondholder on an annual basis. The bond also has a face value, also known as the par value, which is the amount the bond will be worth when it matures.

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