Obligaatiot

Obligaatiot, or bonds, are a type of debt security that allows issuers to raise capital from investors. When an investor buys an obligation, they are essentially lending money to the issuer, which can be a government or a corporation. In return for this loan, the issuer promises to repay the principal amount (the face value of the bond) on a specified maturity date and usually makes periodic interest payments, known as coupon payments, to the bondholder.

The value of an obligation can fluctuate in the secondary market based on factors such as interest rate changes, the issuer's creditworthiness, and market demand. Generally, if interest rates rise, the value of existing bonds with lower coupon rates tends to fall, and vice versa. The creditworthiness of the issuer is crucial; bonds issued by entities with a higher risk of default will typically offer higher interest rates to compensate investors for that risk.

Obligations are considered a relatively conservative investment compared to stocks, though their risk level varies significantly depending on the issuer. Government bonds from stable countries are often seen as very safe, while corporate bonds, especially those from companies with lower credit ratings, carry more risk. Investors can use obligations to diversify their portfolios and generate a predictable stream of income.