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A means of repaying funds advanced through a bond issue. The issuer makes periodic payments to the trustee, who retires part of the issue by purchasing the bonds in the open market.
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This means that every period (usually every year) a company will pay back a portion of their bonds.
An Example would be a company that issues $20 million in bonds with a 20 year maturity and pays back $1million worth of bonds every year at par. This is decided purely random, if the bond is
trading above par value then you will lose, but if the bond is trading below par then you'll gain...its pure luck of the draw. |
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