Short-term bonds payable
Short-term bonds payable refers to bonds that are about to mature, usually referring to bonds with a maturity date within one year.
Definition: Short-term bonds payable refer to bonds that are about to mature, typically within one year. Holders of these bonds can expect to receive the principal and interest repayment in the short term.
Origin: The concept of short-term bonds payable originated from the development of financial markets, especially when companies and governments needed short-term financing. The earliest short-term bonds can be traced back to the 19th century when companies and governments began issuing short-term notes to meet temporary funding needs.
Categories and Characteristics: Short-term bonds payable can be divided into government short-term bonds and corporate short-term bonds.
- Government Short-term Bonds: Usually issued by national or local governments, they have lower risk and relatively lower interest rates.
- Corporate Short-term Bonds: Issued by companies, they carry higher risk but also higher interest rates, suitable for investors with a higher risk tolerance.
- Short Term: Maturity within one year.
- High Liquidity: Due to the short term, they are actively traded in the market, providing high liquidity.
- Lower Risk: Compared to long-term bonds, short-term bonds have lower market and interest rate risks.
Specific Cases:
- Case 1: A company issued a batch of short-term bonds in September 2023, maturing in September 2024, to raise funds for production expansion. Investors who purchase these bonds can expect to receive the principal and interest repayment within one year.
- Case 2: A local government issued a batch of short-term bonds in early 2023, maturing in early 2024, to fund infrastructure construction. Investors who purchase these bonds can expect to receive stable interest income and principal repayment upon maturity.
Common Questions:
- Q: What is the difference between short-term bonds payable and long-term bonds?
A: Short-term bonds payable mature within one year, while long-term bonds typically mature in more than one year. Short-term bonds have lower market and interest rate risks but also lower interest rates. - Q: What are the risks of investing in short-term bonds payable?
A: The main risks include credit risk (issuer default) and interest rate risk (changes in market interest rates).
