Government Bonds

By: Kellie Beran, Alissa Pecos, and Sami Scott.

Definition

  1. A Bond is a written and signed promise to pay a certain sum of money on a certain date, or on fulfillment of a specified condition. All documented contracts and loan agreements are bonds.

  2. A Government Bond is a bond issued by a national government, generally with a promise to pay periodic interest payments and to repay the face value on the maturity date. Government bonds are usually denominated in the country's own currency.

Definition in our own words

A government bond is debt issued by the government. Which means the government owes the person who bought a bond in the government. You have lent money to the government, creating a debt obligation, and they promise to pay back the money that you lend them, plus some interest.

HISTORY

  • Government bonds were issued in the Netherlands in 1517

  • First ever bond issued by a national government was issued by the Bank of England in 1693 to raise money to fund a war against France

  • Bank of England and government bonds were introduced in England by William lll of England

  • Later, governments in Europe started issuing perpetual bonds (bonds with no maturity date) to fund wars and other government spending.

COOL FACTS

World War 2

  • The last time the United States issued war bonds was during World War ll
  • Living in the United States with a median income during World War II meant earning about $2,000 a year
  • Despite the war’s hardships, 134 million Americans were asked to purchase war bonds to help fund the war
  • The war bonds actually were a loan to the government to help finance the war effort.

Explanation Video:

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