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69-588: A municipal bond , commonly known as a muni , is a bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal bonds is often, but not always, exempt from federal and state income taxation. Typically, only investors in the highest tax brackets benefit from buying tax-exempt municipal bonds instead of taxable bonds. Taxable equivalent yield calculations are required to make fair comparisons between

138-408: A Chapter 11 bankruptcy at the giant telecommunications company Worldcom , in 2004 its bondholders ended up being paid 35.7 cents on the dollar. In a bankruptcy involving reorganization or recapitalization, as opposed to liquidation, bondholders may end up having the value of their bonds reduced, often through an exchange for a smaller number of newly issued bonds. A number of bond indices exist for

207-458: A tap issue or bond tap . Nominal, principal, par, or face amount is the amount on which the issuer pays interest, and which, most commonly, has to be repaid at the end of the term. Some structured bonds can have a redemption amount which is different from the face amount and can be linked to the performance of particular assets. The issuer is obligated to repay the nominal amount on the maturity date. As long as all due payments have been made,

276-477: A "when issued" market, and also immediately after they are issued. Once the bonds find their way into retail and mutual fund portfolios, the volume of trade drops off dramatically. The MSRB reports that from March 1998 to May 1999, 71% of the outstanding issues did not trade at all. A 2005 study concluded that 4–6 months after issuance, less than 10% of the sampled bonds traded at all; the probability then rises somewhat so that by four years from issuance, roughly 15% of

345-497: A bond will immediately affect mutual funds that hold these bonds. If the value of the bonds in their trading portfolio falls, the value of the portfolio also falls. This can be damaging for professional investors such as banks, insurance companies, pension funds and asset managers (irrespective of whether the value is immediately " marked to market " or not). If there is any chance a holder of individual bonds may need to sell their bonds and "cash out", interest rate risk could become

414-404: A centralized exchange or trading system. Rather, in most developed bond markets such as the U.S., Japan and western Europe, bonds trade in decentralized, dealer-based over-the-counter markets. In such a market, liquidity is provided by dealers and other market participants committing risk capital to trading activity. In the bond market, when an investor buys or sells a bond, the counterparty to

483-402: A company (i.e. they are lenders). As creditors, bondholders have priority over stockholders. This means they will be repaid in advance of stockholders, but will rank behind secured creditors , in the event of bankruptcy. Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks typically remain outstanding indefinitely. An exception

552-441: A discount. While minimum denominations contribute to illiquidity, another such reason is the total amount of municipal bonds outstanding. There are over 1,500,000 individual municipal CUSIPs representing over 50,000 issuers. To put this into context, there are ~4300 US domestically incorporated exchange-listed stocks and 10,500 stocks that trade over-the-counter . Over the last decade, technology solutions have been applied to make

621-412: A municipal bond is calculated as follows. Where r m = interest rate of municipal bond, r c = interest rate of comparable corporate bond and t = investor's tax bracket (also known as marginal tax rate): For example, assume an investor in the 38% tax bracket is offered a municipal bond that has a tax-exempt yield of 1.0%. Using the formula above, the municipal bond's taxable equivalent yield

690-440: A municipal bond sale to be spent on capital projects within three to five years of issuance. In the United States, although not all municipal bonds are tax-exempt, most are. Tax-exempt securities represented about 80% of trading volume in U.S. municipal bonds in 2020. Interest income from most municipal bonds is excludable from gross income for federal income tax purposes, and may be exempt from state income tax as well, depending on

759-429: A price of 100), their prices will move towards par as they approach maturity (if the market expects the maturity payment to be made in full and on time) as this is the price the issuer will pay to redeem the bond. This is referred to as " pull to par ". At the time of issue of the bond, the coupon paid, and other conditions of the bond, will have been influenced by a variety of factors, such as current market interest rates,

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828-500: A price of 75.26, indicates a selling price of $ 752.60 per bond sold. (Often, in the US, bond prices are quoted in points and thirty-seconds of a point, rather than in decimal form.) Some short-term bonds, such as the U.S. Treasury bill , are always issued at a discount, and pay par amount at maturity rather than paying coupons. This is called a discount bond. Although bonds are not necessarily issued at par (100% of face value, corresponding to

897-456: A proposal are issued in series over a period of time, in order to allow contractors a steady stream of work and the jurisdiction to not be overwhelmed in managing too many projects at once. Before a particular municipal bond is offered to the public, the issuer must publish an "official statement" disclosing material information about the offering. Key players in the issuance process include: Tax regulations generally require all money raised by

966-419: A real problem, conversely, bonds' market prices would increase if the prevailing interest rate were to drop, as it did from 2001 through 2003. One way to quantify the interest rate risk on a bond is in terms of its duration . Efforts to control this risk are called immunization or hedging . There is no guarantee of how much money will remain to repay bondholders. As an example, after an accounting scandal and

1035-661: A strategy called municipal bond arbitrage . The U.S. Supreme Court held in Pollock v. Farmers' Loan & Trust Co. (1895) that the federal government had no power under the U.S. Constitution to tax interest on municipal bonds, but in South Carolina v. Baker (1988), the Supreme Court held the Congress could tax interest income on municipal bonds if it so desired on the basis that tax exemption of municipal bonds

1104-707: A year and a fixed lump sum at maturity is attractive. Bondholders also enjoy a measure of legal protection: under the law of most countries, if a company goes bankrupt , its bondholders will often receive some money back (the recovery amount ), whereas the company's equity stock often ends up valueless. However, bonds can also be risky but less risky than stocks: Bonds are also subject to various other risks such as call and prepayment risk, credit risk , reinvestment risk , liquidity risk , event risk , exchange rate risk , volatility risk , inflation risk , sovereign risk and yield curve risk . Again, some of these will only affect certain classes of investors. Price changes in

1173-504: Is 1.6% (0.01/(1-0.38) = 0.016) - a figure which can be fairly compared to yields on taxable investments such as corporate or U.S. Treasury bonds for decision making purposes. Typically, investors in the highest tax brackets benefit from buying tax-exempt municipal bonds instead of taxable corporate bonds, but those in the lowest tax brackets may be better off buying corporate bonds and paying the taxes. Investors in higher tax brackets may arbitrage municipal bonds against corporate bonds using

1242-553: Is a United States Supreme Court case in which the Court upheld a Kentucky law that provides a preferential tax break to Kentucky residents who invest in bonds issued by the state and its municipalities ( municipal bonds ). The Court held in a 7–2 vote that the State of Kentucky does not engage in unconstitutional discrimination against interstate commerce by exempting the interest on its bonds from residents' taxable income while taxing

1311-446: Is a 12-digit alphanumeric code that uniquely identifies debt securities. In English , the word " bond " relates to the etymology of "bind". The use of the word "bond" in this sense of an "instrument binding one to pay a sum to another" dates from at least the 1590s. Bonds are issued by public authorities, credit institutions, companies and supranational institutions in the primary markets . The most common process for issuing bonds

1380-499: Is among the risks evaluated by a rating agency , which assigns a credit rating to the bond. Credit ratings are generally the starting point buyers use when deciding how much to pay for a municipal bond. Historical default rates have been lower in the municipal sector than in the corporate market. This may be due in part to the fact that some municipals are backed by state and local government power to tax, or revenue from public utilities. However, sharp drops in property valuations (as in

1449-399: Is an irredeemable bond, which is a perpetuity , that is, a bond with no maturity. Certificates of deposit (CDs) or short-term commercial paper are classified as money market instruments and not bonds: the main difference is the length of the term of the instrument. The most common forms include municipal , corporate , and government bonds . Very often the bond is negotiable, that is,

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1518-408: Is commonly used for smaller issues and avoids this cost, is the private placement bond. Bonds sold directly to buyers may not be tradeable in the bond market . Historically, an alternative practice of issuance was for the borrowing government authority to issue bonds over a period of time, usually at a fixed price, with volumes sold on a particular day dependent on market conditions. This was called

1587-821: Is not protected by the Constitution. In this case, the Supreme Court stated that the contrary decision of the Court in Pollock had been "effectively overruled by subsequent case law". The Revenue Act of 1913 first codified exemption of interest on municipal bonds from federal income tax. The Tax Reform Act of 1986 greatly reduced private activities that may be financed with tax-exempt bond proceeds. The United Kingdom 's UK Municipal Bonds Agency (UK MBA) provides services for borrowing by municipalities. Canada has CIBC . Municipal bonds agencies also known as Bond banks or Local government funding agencies exist in other countries, such as Sweden and Finland. In New Zealand,

1656-427: Is only partially correct. Bonds do suffer from less day-to-day volatility than stocks, and bonds' interest payments are sometimes higher than the general level of dividend payments. Bonds are often liquid – it is often fairly easy for an institution to sell a large quantity of bonds without affecting the price much, which may be more difficult for equities – and the comparative certainty of a fixed interest payment twice

1725-429: Is the definition of the redemption yield on the bond, which is likely to be close to the current market interest rate for other bonds with similar characteristics, as otherwise there would be arbitrage opportunities. The yield and price of a bond are inversely related so that when market interest rates rise, bond prices fall and vice versa. For a discussion of the mathematics see Bond valuation . The bond's market price

1794-434: Is the rate of return received from investing in the bond. It usually refers to one of the following: The quality of the issue refers to the probability that the bondholders will receive the amounts promised at the due dates. In other words, credit quality tells investors how likely the borrower is going to default. This will depend on a wide range of factors. High-yield bonds are bonds that are rated below investment grade by

1863-421: Is through underwriting . When a bond issue is underwritten, one or more securities firms or banks, forming a syndicate , buy the entire issue of bonds from the issuer and resell them to investors. The security firm takes the risk of being unable to sell on the issue to end investors. Primary issuance is arranged by bookrunners who arrange the bond issue, have direct contact with investors and act as advisers to

1932-453: Is usually expressed as a percentage of nominal value: 100% of face value, "at par", corresponds to a price of 100; prices can be above par (bond is priced at greater than 100), which is called trading at a premium, or below par (bond is priced at less than 100), which is called trading at a discount. The market price of a bond may be quoted including the accrued interest since the last coupon date. (Some bond markets include accrued interest in

2001-552: The 2009 mortgage crisis ) can strain state and local finances, potentially creating municipal defaults. Harrisburg, PA, when faced with falling revenues, skipped several bond payments on a municipal waste to energy incinerator. The prospect of municipal bankruptcy was raised by the Controller of Harrisburg, although it was opposed by Harrisburg's mayor. Default risk to the investor can be greatly reduced through municipal bond insurance, which promises to pay interest and principal if

2070-681: The Bangalore City Corporation was the first municipal government to issue bonds in November 1997, followed by the Ahmedabad City Corporation in February 1998. Bond (finance) Bonds and stocks are both securities , but the major difference between the two is that (capital) stockholders have an equity stake in a company (i.e. they are owners), whereas bondholders have a creditor stake in

2139-558: The Local Government Funding Agency (LGFA), is the second-biggest issuer of New Zealand-dollar debt behind the government. Local governments in China were not permitted to issue bonds in the open market until 2015, and historically these governments relied on local government financing vehicles as a major source of debt finance. By the end of 2022 a total of CN¥35.1 trillion of bonds were outstanding. In India,

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2208-446: The credit rating agencies . As these bonds are riskier than investment grade bonds, investors expect to earn a higher yield. These bonds are also called junk bonds . The market price of a tradable bond will be influenced, among other factors, by the amounts, currency and timing of the interest payments and capital repayment due, the quality of the bond, and the available redemption yield of other comparable bonds which can be traded in

2277-545: The American Civil War, significant local debt was issued to build railroads. Railroads were private corporations, and these bonds were very similar to today's industrial revenue bonds . Construction costs in 1873 for one of the largest transcontinental railroads, the Northern Pacific , closed down access to new capital. Around the same time, the largest bank of the country of the time, which was owned by

2346-545: The Kentucky tax scheme benefited a clearly public issuer, while treating all private issuers exactly the same. There was no forbidden discrimination because Kentucky, as a public entity, did not have to treat itself as being "substantially similar" to the other bond issuers in the market. The Kentucky tax scheme was constitutional because the Commonwealth's direct participation favored, not local private entrepreneurs, but

2415-612: The Port of New York Authority, formed in 1921 and renamed Port Authority of New York and New Jersey in 1972, and the Triborough Bridge Authority (now the Triborough Bridge and Tunnel Authority), formed in 1933. The debt issues of these two authorities are exempt from federal, state and local governments taxes. The basic types of municipal bonds are: Depending on the jurisdiction and the basis for issuing

2484-445: The alternative minimum tax as an item of tax preference. Municipal bonds' coupon rates are generally lower than those of comparable corporate bonds, but higher than those of their FDIC-insured counterparts: CDs, savings accounts, money market accounts, and others. Historically, municipal bonds have been one of the least liquid assets on the market. One indicator of this is their infrequent trading. Municipal bonds are actively traded in

2553-513: The applicable state laws. Internal Revenue Code section 103(a) is the statutory provision that excludes interest on municipal bonds from federal income tax. As of 2004, other rules, however, such as those pertaining to private activity bonds, are found in sections 141–150, 1394, 1400, 7871. The state and local exemption was the subject of litigation in Department of Revenue of Kentucky v. Davis . Bonds issued for certain purposes are subject to

2622-513: The bond includes embedded options , the valuation is more difficult and combines option pricing with discounting. Depending on the type of option, the option price as calculated is either added to or subtracted from the price of the "straight" portion. See further under Bond option § Embedded options . This total is then the value of the bond. More sophisticated lattice- or simulation-based techniques may (also) be employed. Bond markets, unlike stock or share markets, sometimes do not have

2691-474: The bond issuer in terms of timing and price of the bond issue. The bookrunner is listed first among all underwriters participating in the issuance in the tombstone ads commonly used to announce bonds to the public. The bookrunners' willingness to underwrite must be discussed prior to any decision on the terms of the bond issue as there may be limited demand for the bonds. In contrast, government bonds are usually issued in an auction. In some cases, both members of

2760-444: The bond, voter approval may be required, especially if a property tax levy is involved. Some bonds, for minor projects or emergency situations, may be issued without voter pre-approval. But in all cases, public input (whether a vote, or the opportunity to speak for or against issuance at a public hearing) is required. Voter approval of the bond proposal does not automatically result in the bonds being issued. Frequently, bonds under

2829-508: The bonds in the sample traded at least once during a given month. A 2007 study concluded that the average investment grade tax exempt 1-10 year municipal bond traded 21 times over its 11-year sample and 5.65% of issues only traded once. Unlike corporate and Treasury bonds, which are more likely to be held by institutional investors, municipal bond owners are more diverse, and hence harder to locate, giving this market less liquidity. Compared to stocks, municipal bonds are much harder to maneuver. At

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2898-431: The bonds to match their liabilities, and may be compelled by law to do this. Most individuals who want to own bonds do so through bond funds . Still, in the U.S., nearly 10% of all bonds outstanding are held directly by households. The volatility of bonds (especially short and medium dated bonds) is lower than that of equities (stocks). Thus, bonds are generally viewed as safer investments than stocks , but this perception

2967-490: The currency, the term of the bond (length of time to maturity) and the conditions applying to the bond. The following descriptions are not mutually exclusive, and more than one of them may apply to a particular bond: The nature of the issuer will affect the security (certainty of receiving the contracted payments) offered by the bond, and sometimes the tax treatment. Some companies, banks, governments, and other sovereign entities may decide to issue bonds in foreign currencies as

3036-682: The dealers earn revenue by means of the spread, or difference, between the price at which the dealer buys a bond from one investor—the "bid" price—and the price at which he or she sells the same bond to another investor—the "ask" or "offer" price. The bid/offer spread represents the total transaction cost associated with transferring a bond from one investor to another. Bonds are bought and traded mostly by institutions like central banks , sovereign wealth funds , pension funds , insurance companies , hedge funds , and banks . Insurance companies and pension funds have liabilities which essentially include fixed amounts payable on predetermined dates. They buy

3105-505: The foreign currency may appear to potential investors to be more stable and predictable than their domestic currency. Issuing bonds denominated in foreign currencies also gives issuers the ability to access investment capital available in foreign markets. A downside is that the government loses the option to reduce its bond liabilities by inflating its domestic currency. The proceeds from the issuance of these bonds can be used by companies to break into foreign markets, or can be converted into

3174-671: The interest earned on the bonds of other states. The case has national implications because thirty-six (36) states have tax schemes similar to the one at issue in Kentucky. George and Catherine Davis sued the State of Kentucky under the legal theory that the State of Kentucky violated the Dormant Commerce Clause , a legal implication of the Commerce Clause , by providing a differential tax treatment to gains earned from investments in municipal bonds from Kentucky versus other states. The majority opinion stated that

3243-477: The issuer does not do so. Projecting the yield to maturity on municipal bonds usually involves incorporating tax brackets. Comparing the yield on a municipal bond to that of a corporate or U.S. Treasury bond can be misleading, because of differing tax treatment of the income from the two types of securities. For that reason, investors use the concept of taxable equivalent yield to compare municipal and corporate or Treasury bonds. The taxable equivalent yield on

3312-550: The issuer has no further obligations to the bond holders after the maturity date. The length of time until the maturity date is often referred to as the term or tenor or maturity of a bond. The maturity can be any length of time, although debt securities with a term of less than one year are generally designated money market instruments rather than bonds. Most bonds have a term shorter than 30 years. Some bonds have been issued with terms of 50 years or more, and historically there have been some issues with no maturity date (irredeemable). In

3381-413: The issuer receives are thus the issue price, less issuance fees. The market price of the bond will vary over its life: it may trade at a premium (above par, usually because market interest rates have fallen since issue), or at a discount (price below par, if market rates have risen or there is a high probability of default on the bond). Bonds can be categorised in several ways, such as the type of issuer,

3450-431: The issuing company's local currency to be used on existing operations through the use of foreign exchange swap hedges. Foreign issuer bonds can also be used to hedge foreign exchange rate risk. Some foreign issuer bonds are called by their nicknames, such as the "samurai bond". These can be issued by foreign issuers looking to diversify their investor base away from domestic markets. These bond issues are generally governed by

3519-496: The law of the market of issuance, e.g., a samurai bond, issued by an investor based in Europe, will be governed by Japanese law. Not all of the following bonds are restricted for purchase by investors in the market of issuance. The market price of a bond is the present value of all expected future interest and principal payments of the bond, here discounted at the bond's yield to maturity (i.e. rate of return ). That relationship

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3588-422: The length of the term and the creditworthiness of the issuer. These factors are likely to change over time, so the market price of a bond will vary after it is issued. (The position is a bit more complicated for inflation-linked bonds.) The interest payment ("coupon payment") divided by the current price of the bond is called the current yield (this is the nominal yield multiplied by the par value and divided by

3657-406: The market for United States Treasury securities, there are four categories of bond maturities: The coupon is the interest rate that the issuer pays to the holder. For fixed rate bonds , the coupon is fixed throughout the life of the bond. For floating rate notes , the coupon varies throughout the life of the bond and is based on the movement of a money market reference rate (historically this

3726-449: The market more responsive to investors, more financially transparent and ultimately easier for issuers and buyers. The emergence of small denomination municipal bonds makes the muni market more accessible to middle-income buyers. It is believed that these initiatives will reduce lower debt issuance costs. Default risk is a measure of the possibility that the issuer will fail to make all interest and principal payments, on time and in full. It

3795-430: The market-wide demand that an opinion of qualified bond counsel accompany each new issue. When the U.S. economy began to move forward once again, municipal debt continued its momentum, which was maintained well into the early part of the twentieth century. The Great Depression of the 1930s halted growth, although defaults were not as severe as in the 1870s. Leading up to World War II, many American resources were devoted to

3864-423: The markets. The price can be quoted as clean or dirty . "Dirty" includes the present value of all future cash flows, including accrued interest, and is most often used in Europe. "Clean" does not include accrued interest, and is most often used in the U.S. The issue price at which investors buy the bonds when they are first issued will typically be approximately equal to the nominal amount. The net proceeds that

3933-845: The military, and prewar municipal debt burst into a new period of rapid growth for an ever-increasing variety of uses. Today, in addition to the 50 states and their local governments (including cities, counties, villages and school districts), the District of Columbia and U.S. territories and possessions (American Samoa, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands) can and do issue municipal bonds. Another important category of municipal bond issuers which includes authorities and special districts has also grown in number and variety in recent years. The two most prominent early authorities were

4002-441: The ownership of the instrument can be transferred in the secondary market . This means that once the transfer agents at the bank medallion-stamp the bond, it is highly liquid on the secondary market. The price of a bond in the secondary market may differ substantially from the principal due to various factors in bond valuation . Bonds are often identified by their international securities identification number, or ISIN , which

4071-439: The price). There are other yield measures that exist such as the yield to first call, yield to worst, yield to first par call, yield to put, cash flow yield and yield to maturity. The relationship between yield and term to maturity (or alternatively between yield and the weighted mean term allowing for both interest and capital repayment) for otherwise identical bonds derives the yield curve , a graph plotting this relationship. If

4140-440: The public and banks may bid for bonds. In other cases, only market makers may bid for bonds. The overall rate of return on the bond depends on both the terms of the bond and the price paid. The terms of the bond, such as the coupon, are fixed in advance and the price is determined by the market. In the case of an underwritten bond, the underwriters will charge a fee for underwriting. An alternative process for bond issuance, which

4209-769: The purposes of managing portfolios and measuring performance, similar to the S&;P 500 or Russell Indexes for stocks . The most common American benchmarks are the Bloomberg Barclays US Aggregate (ex Lehman Aggregate), Citigroup BIG and Merrill Lynch Domestic Master . Most indices are parts of families of broader indices that can be used to measure global bond portfolios, or may be further subdivided by maturity or sector for managing specialized portfolios. Market specific General Department of Revenue of Kentucky v. Davis Department of Revenue of Kentucky v. Davis , 553 U.S. 328 (2008),

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4278-544: The same investor as that of Northern Pacific, collapsed. Smaller firms followed suit as well as the stock market. The 1873 panic and years of depression that followed put an abrupt but temporary halt to the rapid growth of municipal debt. Responding to widespread defaults that jolted the municipal bond market of the day, new state statutes were passed that restricted the issuance of local debt. Several states wrote these restrictions into their constitutions. Railroad bonds and their legality were widely challenged, and this gave rise to

4347-409: The same time, the minimum investment amounts for stocks are typically <$ 500 and about $ 1000 for CDs and money markets; in comparison, municipal bonds typically have minimum denomination buy-ins of $ 5000 but smaller issuers may have buy-ins of $ 1000 to incentivize local or regional investors. An investor's overall principal cost may be lower than the $ 5000 minimum denomination by purchasing the bonds at

4416-529: The trade is almost always a bank or securities firm acting as a dealer. In some cases, when a dealer buys a bond from an investor, the dealer carries the bond "in inventory", i.e. holds it for their own account. The dealer is then subject to risks of price fluctuation. In other cases, the dealer immediately resells the bond to another investor. Bond markets can also differ from stock markets in that, in some markets, investors sometimes do not pay brokerage commissions to dealers with whom they buy or sell bonds. Rather,

4485-559: The trading price and others add it on separately when settlement is made.) The price including accrued interest is known as the "full" or " dirty price ". ( See also Accrual bond .) The price excluding accrued interest is known as the "flat" or " clean price ". Most government bonds are denominated in units of $ 1000 in the United States , or in units of £100 in the United Kingdom . Hence, a deep discount US bond, selling at

4554-470: The two categories. The U.S. municipal debt market is relatively small compared to the corporate market: total municipal debt outstanding was $ 4 trillion as of the first quarter of 2021, compared to nearly $ 15 trillion in the corporate and foreign markets. But conversely, the number of municipal bond issuers (state and local governments and other affiliated entities) far exceeds the number of corporate bond issuers. Local authorities in many other countries in

4623-413: The world issue similar bonds, sometimes called local authority bonds or other names. Municipal debt predates corporate debt by several centuries—the early Renaissance Italian city-states borrowed money from major banking families. Borrowing by American cities dates to the nineteenth century, and records of U.S. municipal bonds indicate use around the early 1800s. Officially the first recorded municipal bond

4692-469: Was a general obligation bond issued by the City of New York for a canal in 1812. During the 1840s, many U.S. cities were in debt, and by 1843 cities had roughly $ 25 million in outstanding debt. In the ensuing decades, rapid urban development demonstrated a correspondingly explosive growth in municipal debt. The debt was used to finance both urban improvements and a growing system of public education. Years after

4761-528: Was generally LIBOR , but with its discontinuation the market reference rate has transitioned to SOFR ). Historically, coupons were physical attachments to the paper bond certificates, with each coupon representing an interest payment. On the interest due date, the bondholder would hand in the coupon to a bank in exchange for the interest payment. Today, interest payments are almost always paid electronically. Interest can be paid at different frequencies: generally semi-annual (every six months) or annual. The yield

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