Introduction to Bonds and Interest Rates

These flashcards cover key concepts related to bonds and interest rates based on the lecture notes.

Bond

A debt contract representing an agreement to pay back borrowed money at a future date.

Face Value

The amount of money that the bond issuer agrees to pay back at maturity.

Interest Rate

The cost of borrowing money, typically expressed as a percentage, which influences investment decisions.

Opportunity Cost

The potential benefit that is missed out on when choosing one alternative over another, such as saving cash instead of investing.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Private Investment

Investment made by individuals or companies, often reliant on borrowing and interest rates.

Market Interest Rate

The prevailing interest rate in the market, which impacts the cost of loans and investments.