walcruise:
Someone should please explain how bonds work

See refresher

[url]https://www.nairaland.com/search?q=bond+hotguy27&board=0[/url]

Hotguy27:
For the benefit of those who do not understand this concept, let me explain in simpler languages as it relates to this topic.

A bond is an instrument issued by a company (in this case a bank -Access) to investors or holders (I.e people who buy the instruments with their money) with a promise to continue to pay interest (also called the coupon) at periodic intervals (biannually or annually) till the maturity date (e.g 5 years, 10 years etc)

In the past, when investors were fools (laughs), companies used to go to the public to raise money for their businesses in the form of selling shares. Those who buy their shares will be part of the owners of the companies. If the company makes profit you will be paid dividends and if they did not make profit you will not be paid anything at the end of the financial year. The value of your shares can go up or come down depending on the economy or the company's performance. Now, people have discovered that they gain little or nothing by investing through that means. As a result, it is very hard for companies to raise enough capitals now through selling of shares. Investors are wiser. So, they now go through Treasury Bill and Bonds.
You must have seen something like Unsecured bond here or heard something like guaranteed bonds before.
A guaranteed bond is the type of bond that a company issues in which another company or a third party has promised to pay the interests and principal as agreed if the issuer refuses or fails to pay. While unsecured bond does not have any collateral or third party that can repay in case the issuer fails to pay. This is where the rating comes in. The rating is just to show how safe or risk is it to buy the bonds.

Now, if one invests or buys this Access bond with N1M, he/ she will be paid N155,000 every year as interest for 5 years. At the end of the 5th year the principal amount of N1m will be paid back to the investor. Within this period, the bank must have done businesses with your money and if all things being equal, the bank will make huge profit from using your money to do business.

I wanted to explain further but let's have it like this first.

Thanks bro. an investment of N1m with an interest of N155,000 annually is nothing but a waste of time bro...all these banks are nutting but reaper's. I heard inside dailies that CEOs in Financial sector with wherewithal do go cap in hand to the US, borrow at <%4 interest, bring the money in $ to Nigeria...invest in Treasury bills and FGN bonds with %12~ 14 interest...make more money in a short while and leave .