Bond markets play a crucial role in financing government and corporate activities from "summary" of How Finance Works by Mihir Desai
Bond markets are a critical source of financing for both governments and corporations worldwide. These markets serve as a mechanism for these entities to raise funds by issuing bonds to investors. When a government or corporation needs to raise money for various activities, such as building infrastructure or expanding operations, they can turn to the bond market as a way to generate the necessary capital. By issuing bonds, governments and corporations essentially borrow money from investors with the promise to repay the principal amount at a specified future date, along with periodic interest payments. This arrangement allows these entities to access large sums of money upfront, which they can then use to fund their projects or operations. In return, investors receive a fixed income in the form of interest payments over the life of the...
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