2.6.4 Bond Certificates
The principal of the bond is the amount the investor lends to the borrower (the issuing entity) when the investor buys the bond. It is also what the investor will be repaid at the bond’s maturity. It is equivalent to the par value of the bond, and it is the amount printed on the bond certificate. The par value of a corporate bond is typically $1,000.
Bearer bonds, also called coupon bonds, are old-fashioned bond certificates that have coupons attached but no owner’s name printed on them. Anyone who possesses the bearer bond certificate may present a coupon to receive an interest payment or present the bond itself for payment at maturity. Because bearer bonds are not registered to a specific owner, they can be easily stolen. Also, their owners can receive interest payments anonymously, making tax avoidance easier. As a result, bear