Fixed Rate Bond

Fixed Rate Bond Meaning:
In British deposit terminology, the term Fixed Rate Bond refers to an interest bearing deposit made for a set length of time that provides the depositor with little or no access to their funds, much like a certificate of deposit or CD. In other countries, a Fixed Rate Bond is a security issued by a government or business corporation which pays out a fixed interest rate on the amount of the face value of the security. Such Fixed Rate Bonds are primarily long term securities.

Fixed Rate Bond Example:
For example, Fixed Rate Bond deposits are relatively safe investments when provided by insured U.K. financial institutions. Furthermore, an investor buying an issued Fixed Rate Bond will often be looking to make a long term investment with bi-annual or quarterly interest payments. The Fixed Rate Bond differs from the variable or floating rate bond which has a fluctuating rate of interest and is characterized by its fixed coupon or interest rate and by the long term on the maturity date of the bond. Fixed Rate Bonds generally pay out interest every six months until the maturity date of the bond, when the principal amount is reimbursed and the bond is liquidated. U.S. government issued Fixed Rate Bonds are considered relatively safe long term investments.