Börsenlexikon: Obligation

Bonds are the collective term for all fixed-income securities such as bonds, mortgage bonds, debentures, etc. In contrast to shares, which securitise a share in a company, they represent a monetary debt that bears interest at a fixed rate (coupon) and has a fixed term. Bonds are usually traded on the stock exchange and are subject to price fluctuations that depend on the level of interest rates on the capital market. However, these fluctuations are normally much smaller than those of equities. The investment risk varies. It is influenced by maturity, creditworthiness of the debtor, currency and domicile. While the shareholder has membership and asset rights, the bondholder has only claim rights. Unlike the shareholder, who provides the company with equity capital, the holder of a fixed-interest security only lends out his money - for the company it is therefore debt capital. The bondholder is entitled to the repayment of his money and to the contractually agreed interest. Important: You can also suffer losses with bonds. This is due to the fact that the market interest rate for newly issued bonds rises and falls. The federal government, cantons and companies usually have several bonds with different coupon rates in circulation. The different interest rates are based on the time of issue and the respective interest rate levels. The best time to buy is when capital market interest rates are high and there is a prospect of interest rates falling. Long-term bonds with high interest rates are then in demand, so that investors can profit from price gains. During periods of low interest rates, it is therefore advisable to invest in short-term bonds.