What is a government bond?
Bonds can be issued by the government or by companies. In this website we are going to focus on treasury bonds. They are one of the safest securities in the financial markets because they usually have no risk, only if the government defaults. Germany, Japan and the U.S are the best bonds to invest on if you are specially a risk averse person. However, you have to take into account that when safer, lower interest rates. Then they will pay you less. The sovereign bonds pay interests to the holder, the interests are called coupon rates. Usually they pay it annually but they can also be paid semiannually. The most common maturities are 1 year, 10 years and 30 years. Long term bonds tend to be way more risky than the short term, therefore they have higher returns. The reason behind that is the fact that when longer maturity comes more uncertainty of the future and how the economy is going to change.
