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Government bond

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Government bond
A government Bond is a Bond issued by a national government denominated in the country's own Currency. Bonds issued by national governments in foreign currencies are normally referred to as sovereign bonds.
    
One of the world's largest and most liquid Bond markets is comprised of Debt securities issued by the U.S. Treasury, by U.S. government agencies and by U.S government-sponsored enterprises. U.S. Treasury Securities, used to finance the federal government Debt, are also considered to have the Bond market's lowest Risk because they are guaranteed by the U.S. government's "full faith and credit" or, in other words, its taxing authority. Government agencies and government-sponsored enterprises such as Ginnie Mae, Fannie Mae and Freddie Mac also issue Debt to support their role in financing mortgages that enable more Americans to own homes. These agency securities are also popular investments because of their High credit ratings.
    
Government bonds are usually referred to as Risk-free bonds, because the government can raise taxes or simply print more money to redeem the Bond at maturity. Some counter examples do exist where a government has defaulted on its domestic Currency Debt, such as Russia in 1998- the "ruble crisis", though this is very rare.
Posted by  Privatebanking.com
 
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