Basically bonds are fall in the wealth category there are many types of bonds that exist in the world. Right now but most famous is a government bond. In a modern country like the USA, the government pays interest. According to the rate of that bond and the region where that person buys and sells bonds. Because the government has different types of bonds municipal bonds, the provincial government has also. Their own bond and most famous and most successful is business term is federal government bonds. The government has bound to pay equal amounts to that bond mostly people. Especially corporate deals via bond because the bond is a safe and secure way of payment around the world. But in a low economic country or you say 3rd world country does not pay a single penny in form of interest.
In that type of country the government pays an equal amount of bond there is no extra interest. But in some ASIAN country government announce the monthly prize. The government pick some bound number and publish that number in the newspaper so bondholders check. That number and anyone has same number of bond the government pay prize amount according to their bond prize and level. There is any type of bond government issue every bond category has 3 winners 1st 2nd and 3rd.
And there is a different type of other bonds is also exist some companies. Also, issue bonds equal to your investment but you cannot make a trade of that bond like stocks and shares. And that company is bound to pay an amount equal that bond at any time. But if that company filled bankruptcy then no one gets a return of his money
The function of bonds:
- People by the bond to save money because bonds are considered as wealth. But you cannot trade bonds as you can trade in stock markets.