Bonds

These are issued by governments or companies in order to raise funds. In exchange, the investor (or buyer of the bond) is paid a set amount of interest regularly. This is why they are also known as fixed-interest securities. Bonds issued by the UK Government and traded on the stockmarket are known as gilts. Bonds issued by companies usually carry a higher rate of interest since they don’t have the Government’s guarantee behind them. Bond prices move up and down with market conditions. Bonds in this context should not be confused with financial services products such as investment or life assurance bonds sold by financial services organisations.