Bondholder

The possessor of a government or corporate bond. Being a bondholder is frequently considered safer than being a shareholder because if a company liquidates, it must pay its bondholders before it pays its shareholders. Being a bondholder entitles one to receive regular interest payments, if the bond pays interest (usually semi-annually or per annum), as well as a return of major when the bond matures.

Bonds are supposed as being low risk, but the level of risk depends on the sort of bond in query. For example, holding company bonds will profit higher returns than holding government bonds, but they come with larger risk. Bonds also are question to interest rate risk, reinvestment risk, inflation risk, credit/default risk, fluidity risk and rating demotions. A benefit of being a bondholder is that some bonds are exempt from federal, state or local income taxes.

 

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