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Types of bonds


Fixed-rate bonds

Fixed-rate bonds (also known as vanilla bonds, standard bonds or straight bonds) accrue interest at a fixed rate throughout the duration. Fixed-rate bonds accrue interest at a fixed rate throughout the duration.

Because of the higher risk involved, longer durations are usually associated with higher interest rates. The debtor's creditworthiness, which reflects its creditworthiness, is another factor that affects the interest rate. The lower the issuer's credit rating, the more interest it has to pay in order to raise money in the capital market. Credit ratings are determined by rating agencies which analyse borrowers and assign them to certain risk classes. Investors evaluate credit ratings according to these classes (Rating).