Economics Bonds Questions
The role of bond markets in the economy is to facilitate the borrowing and lending of funds between borrowers (such as governments, corporations, and municipalities) and lenders (such as individuals, institutional investors, and foreign entities). Bond markets provide a platform for these entities to issue and trade bonds, which are debt instruments that represent a promise to repay the principal amount along with periodic interest payments. By allowing borrowers to access capital and investors to earn returns, bond markets play a crucial role in allocating funds, promoting investment, and influencing interest rates in the economy. Additionally, bond markets provide a benchmark for assessing creditworthiness, as bond prices and yields reflect market perceptions of risk and return.