Government Bonds

Government bonds are issued by the governments of countries or state-owned organisations or public institutions. Short-term government bonds (up to one year) are usually issued as discounted bonds, i.e. they have no coupon. When purchased, they are sold at a discount, i.e. at a lower price than the nominal price where the discount represents the yield. Medium- and long-term government bonds bring the investors regular interest income (coupon). Government bonds represent one of the safest investments and, therefore, only interest rate risk is to be mentioned.