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The following article was published in our article directory on March 9, 2012.
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Rate of Return for Government Bonds

Article Category: Business

Author Name: chickie maxwell

Government bonds are usually thought of as safer investments than other bond types. They are also have minimal risks compared to the volatile nature of stocks of companies. Government bonds also usually give a better rate of return than time deposits.

What are government bonds?

Bonds as a whole are investments made in order to fund a certain borrower's needs. The investor basically loans the issuer of the bond, be it a company or a government. Government bonds are bonds issued by the national or federal government, depending which country you are looking at. The government, which is the issuing entity in this case, promises to pay a par value on an agreed upon date, as well as interest payments at certain dates to the bond investor.

Government bonds are considered to be virtually risk-free bonds. The reason for this is that the government is not some company that can belly up and file bankruptcy just like that. The government also has the power to raise taxes or even create currency in the national or federal banks as needed to fund a bond when monies need to be released during maturity. The only time wherein a government bond investor needs to worry is when the issuing government's country is at a massive civil war that can cripple the country's economy or the country does not have its own currency. An example of this is what happened in Greece this 2011.

How to compute the annual rate of return for government bonds?

In calculating the annual rate of the bond, you need to know the following information, how much the par value of the bond is, the interest rate of the bond and lastly, how much you will pay for or invest to get the bond. It will be ideal that the amount that you will have to cash out to pay for the bond is lower than the par value.

To compute, multiply the interest rate by the par value, divide the result of this computation with the price that needs to be paid for the bond to be acquired. Lastly, multiply that result by 100 and you get the annual rate of return. Here is a sample equation for your reference.
- Par value = $100, Interest rate = 5%, Price to buy bond = $90
- Annual return rate = $90 x 100
- Annual return rate = (5/90) x 100
- Annual return rate = 5.56%

If you do want to lend out money as an investment in an alternative way, then you may want to consider going with Prosper. Prosper is a peer-to-peer lending group that allows you, as an investor, to gain seasoned returns higher than average bond returns. If you want to learn more and their rate of return, visit their site, e of Return for Government Bonds

Government bonds are usually thought of as safer investments than other bond types. They are also have minimal risks compared to the volatile nature of stocks of companies. Government bonds also usually give a better rate of return than time deposits.

What are government bonds?

Bonds as a whole are investments made in order to fund a certain borrower's needs. The investor basically loans the issuer of the bond, be it a company or a government. Government bonds are bonds issued by the national or federal government, depending which country you are looking at. The government, which is the issuing entity in this case, promises to pay a face value on an agreed upon date, as well as interest payments at certain intervals to the bond investor.

Government bonds are considered to be virtually risk-free bonds. The reason for this is that the government is not some company that can belly up and file bankruptcy just like that. The government also has the power to raise taxes or even create currency in the national or federal banks as needed to fund a bond when investors need to be paid back when bonds mature . The only time wherein a government bond investor should start worrying is when the issuing government's country is at a massive civil war that can cripple the country's economy or the country does not have its own currency. Such as what happened in Greece this 2011.

How to compute the annual rate of return for government bonds?

In calculating the annual rate of the bond, you need to know the following information, how much the par value of the bond is, the interest rate of the bond and lastly, how much you will pay for or invest to get the bond. It will be ideal that the amount that you will have to cash out to pay for the bond is lower than the par value.

To compute, multiply the interest rate by the par value, divide the result of this computation with the price that needs to be paid for the bond to be acquired. Lastly, multiply that result by 100 and you get the annual rate of return. Here is a sample equation for your reference.
- Par value = $100, Interest rate = 5%, Price to buy bond = $90
- Annual return rate = (5% x $100) x 100
- Annual return rate = (5/90) x 100
- Annual return rate = 5.56%

If you do want to lend out money as an investment in an alternative way, then you may want to consider going with Prosper. Prosper is a peer-to-peer lending group that allows you, as an investor, to gain seasoned returns higher than average bond returns. If you want to learn more and their rate of return, visit their site,  HYPERLINK "http://www.prosper.com" www.prosper.com or call them at 1-866-615-6319, Monday to Friday, 6am to 6pm Pacific Time.

Keywords: rate of return

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