The following descriptions are not mutually exclusive and more than one of them may apply to a given obligation: a bond purchase contract has many conditions. It could, for example, require the issuer not to borrow other debts secured by the same assets that insure the bonds sold by the insurer, and it could require the issuer to notify the insurer of any negative changes in the issuer`s financial situation. The bond purchase agreement also ensures that the issuer is who it is, that it is authorized to issue bonds, that it is not subject to legal action and that its financial statements are correct. The face, principal, nominal or nominal value is the amount on which the issuer pays interest and which must be repaid most often at the end of the maturity. Some structured bonds may have a different repayment amount than the nominal amount that may be related to the performance of certain assets. Bond markets may also differ from equity markets because, in some markets, investors sometimes do not pay brokerage commissions to traders with whom they buy or sell bonds. On the contrary, traders derive income from the spread or the difference between the price at which the trader buys a bond from an investor – the price of the offer – and the price at which he sells the same loan to another investor – the price of the question or offer. The offer/offer spread represents the total cost of the transaction related to the transfer of a loan from one investor to another. A bond purchase agreement (EPS) is a legally binding document between a bond issuer and a sub-contractor that sets out the terms of the bond sale. The terms of a bond purchase agreement include, among other things, terms of sale such as the sale price, the loan rate, the maturity of the loan, provisions for withdrawal of bonds, provisions for declining funds and the conditions under which the agreement may be terminated. The construction loan works for the obligatory, usually a public body, in order to protect a project from not being completed or not fulfilling the project specifications of the contractor who received the task. This link binds the contractor to the project and ensures that its performance meets the specifications. Volatility in bonds (particularly short and medium bonds) is lower than for equities.
As a result, bonds are generally considered safer investments than equities, but this perception is only partially correct. Bonds suffer less volatility on a daily basis than equities, and bond interest payments are sometimes higher than the general level of dividends. Bonds are often liquid – it`s often easy enough for an institution to sell a large amount of bonds without affecting the price, which can be more difficult for stocks – and the comparative security of a fixed interest payment twice a year and a fixed plan at maturity is attractive. Bondholders also enjoy a certain degree of legal protection: according to the law of most countries, when a company goes bankrupt, bondholders often receive some money (the amount of recovery), while the company`s shares are often worthless.