1 The Bond market Bond a certificate of indebtedness that specifies the obligations of the borrower to the holder of the bond (IOU Attributes term: the length of time until the bond matures credit risk: the probability that the borrower will fail to pay some of the interest or principal( default) tax treatment: the way in which the tax laws treat the interest earned on the bond1. The Bond Market ➢ Bond ⚫ a certificate of indebtedness that specifies the obligations of the borrower to the holder of the bond. (IOU) ➢ Attributes ⚫ term: the length of time until the bond matures ⚫ credit risk: the probability that the borrower will fail to pay some of the interest or principal. (default) ⚫ tax treatment: the way in which the tax laws treat the interest earned on the bond