Economics Bonds Questions
The main difference between a serial bond and a term bond lies in their repayment structure.
A serial bond is a type of bond where the principal amount is repaid in installments over a series of specified dates. Each installment typically corresponds to a portion of the principal, and the bond is fully repaid by the end of its maturity period. This type of bond is commonly used for projects with predictable cash flows, such as infrastructure development.
On the other hand, a term bond is a bond that has a single maturity date, at which the entire principal amount is repaid. Unlike a serial bond, there are no intermediate repayments or installments throughout the bond's life. Term bonds are often issued for long-term financing needs, such as corporate debt or government bonds.
In summary, the key distinction between a serial bond and a term bond is that a serial bond has multiple repayment installments over time, while a term bond has a single repayment at maturity.