ABSTRACT
Bonds are used for long-term borrowing by the issuer. Central governments are major issuers of bonds (and in the UK government bonds are called gilt-edged securities, or gilts). Bonds are issued in a wide variety of forms. However, most government bonds conform to a conventional format. A conventional government bond pays a fixed sum of money, known as the coupon, at regular intervals such as every six months. It has a definite redemption date on which the government is obliged to pay the nominal, or par, value of the bond to its owner. Its market price is expressed in relation to its nominal or par value. For example pounds per £100 nominal (so a market price of £96 means that £96 must be paid for every £100 to be repaid at redemption).
