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BOND: The general term for a long-term loan in which a borrower agrees to pay a lender an interest rate (usually fixed) over the length of the loan and then repay the principal at the date of maturity. Bond maturities are usually 10 years or more, with 30 years quite common. Bonds are used by corporations and federal, state, and local governments to raise funds. Most bonds are negotiable, or can be readily traded prior to their maturity date. The price at which a bond sells depends on the original amount borrowed, the interest rate the bond pays, and comparable interest rates and returns on other investments in the economy.
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INTEREST-RATE EFFECT A change in aggregate expenditures on real production, especially those made by the household and business sectors, that results because a change in the price level alters the interest rate which then affects the cost of borrowing. This is one of three effects underlying the negative slope of the aggregate demand curve associated with a movement along the aggregate demand curve and a change in aggregate expenditures. The other two are real-balance effect and net-export effect.
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GREEN LOGIGUIN
[What's This?]
Today, you are likely to spend a great deal of time wandering around the downtown area looking to buy either a package of 4 by 6 index cards, the ones with lines or a 50 foot extension cord. Be on the lookout for slow moving vehicles with darkened windows.
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Junk bonds are so called because they have a better than 50% chance of default, carrying a Standard & Poor's rating of CC or lower.
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"If I have ever made any valuable discoveries, it has been owing more to patient attention than to any other talent. " -- Isaac Newton, mathematician, physicist
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G-10
Group of Ten
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