The legal document that states the rights and obligations
of bondholders and issuers is known as a Bond Indenture. Before the bonds
are issued to the public, an issuing organization’s Board of Directors
and shareholders must provide a unanimous approval. Bonds are regulated
by the Securities Exchange Commission (SEC) and the Financial Industry
Regulatory Authority (FINRA). Registration with the SEC requires stating
the number of bonds authorized to be issued, par value, contract interest
rate, when interest payments are to be made, and other relevant information.
Bonds are usually offered in denominations of $1000 or $5000.
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