Fairway Bond
The goal of any good tee shot is to keep it on the fairway; we want to keep it between the rough sections, and on course toward its goal.
Fairway bonds kind of operate on the same premise. A fairway bond is a special little bond that is attached to a floating interest rate. What this means is that people who own them can make extra coin on them as long as that interest rate stays within a certain range between the date that they buy it and the date that the bond matures.
These bonds are a pretty good deal for the more conservative investing crowd out there. Worst case scenario, the interest rate doesn’t stay in its specified range (i.e., on the fairway), and when the bond matures, all you get is your money back. Boo. Best case scenario, if you buy one of these puppies because you think the interest rate is going to rise into your specified range, and then it does, you can make a pretty penny on your investment and get the value of the bond itself back when it matures. And then you don't have to throw your club into a tree.
Related or Semi-related Video
Finance: What is a Moral Obligation Bond...7 Views
Finance allah shmoop what is a moral obligation bond So
one of our writers totally messed this one up and
we started a video about promises to pay dentists So
a moral obligation bond is one that gets paid because
well you have good morals or you feel morally obligated
to pay hey if you don't necessarily legally have to
pay it but you're morally obligated Teo do so let's
think about this Hospitals universities do gooder projects of all
shapes and sizes that is on a lone dusty highway
west of omaha a tiny city wants to build a
trucker parking hub with excellent hot dogs clean ish showers
and a mud flap emporium They need three million bucks
to build this thing for the kindly loving truckers while
it's still human beings doing nothing and well on their
own city can't afford it the state realizing how good
this depot would be for commerce in business coming into
and out of the state they decide to guarantee the
bonds of that little city The city is backing it
without reams of paper a forest full of paper sign
contracts or any other major structural legal limits in practice
The bonds air publicized as a gift to the area
and they create extreme embarrassment to the politicos who backed
it Should that bond ever fail That is whoever's managing
the facility and supposed to collect the you know shower
tuition from the truckers stops collecting it and or the
truckers find somewhere else to go with mohr cleanest showers
or this is a municipal moral obligation bond but the
term applies to bonds that are not government backed as
well The holy rollers church of greater baltimore is raising
money to replace all the stained glass windows that have
been broken by you know errant baseball's from the neighboring
field They get each of their congregants toe loan the
church three grand and no they're not passing contracts along
with the collection plate there's nothing in writing saying that
the church will use that money to replace the windows
they promised or because the members let the church get
their dough back The church has a moral obligation to
pay back the money that they were loaned to make
good on their promise and if they default well they'll 00:02:10.823 --> [endTime] have to answer to the big guy in charge
Up Next
When a bond is secured, it means it's protected, i.e. there are assets that would be forfeited if repayment is not made. When it's unsecured... it'...
What is a story bond? Well, snuggle up...we'll tell you a story all about it.
A surety bond is an agreement between three parties in which one party guarantees that a second party will fulfill a promise to the third party.