Bearer Bond
A bearer bond is an unregistered debt security payable to the holder of the physical certificate, creating transferability, custody, tax, and compliance risks.
Bond principal, face value, book-entry, registered, and bearer-security terms that affect repayment, settlement, custody, and transfer.
Principal, face value, and ownership form define the amount a bond is based on, the amount normally due at maturity, and how ownership is recorded or transferred.
Use this section when a question depends on par amount, bond face value, book-entry securities, registered ownership, bearer form, or transfer mechanics. Pricing and bond yield calculations depend on these reference points.
| Concept | Plain-English meaning | Why it matters |
|---|---|---|
| Principal | Amount the borrower is obligated to repay under the bond terms | Drives redemption value, default exposure, and repayment schedules. |
| Face value | Stated amount used for coupon and price conventions | Helps explain premium, discount, and par pricing. |
| Market price | What the bond trades for now | Moves with rates, credit spreads, liquidity, and embedded options. |
| Book-entry form | Electronic ownership record instead of a paper certificate | Reduces certificate-handling risk and supports modern settlement. |
| Registered form | Owner is recorded by name | Helps determine who is entitled to payments and transfer rights. |
| Bearer form | Possession of the certificate historically controlled payment rights | Rare in modern U.S. markets and carries loss, theft, and compliance concerns. |
A bond has a $1,000 face value and a 5% annual coupon. The annual coupon is based on face value, so the stated annual coupon amount is $50. If the bond trades at $960, the investor paid below face value, but the issuer’s principal promise is still measured against the bond terms, not the current market quote.
Check the CUSIP-level security description, denomination, minimum transfer amount, settlement record, registered owner or custodian, maturity schedule, redemption provisions, and whether the security is held through a broker, depository, TreasuryDirect, or another book-entry system.
Investor.gov’s bond overview explains principal, face value, maturity, and risk in beginner language. TreasuryDirect’s guidance on where Treasury securities are held is useful for understanding book-entry holding systems for U.S. Treasury marketable securities.
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A bearer bond is an unregistered debt security payable to the holder of the physical certificate, creating transferability, custody, tax, and compliance risks.
A bearer security is owned by whoever physically holds the certificate, creating transferability, custody, tax, and compliance concerns.
A bond is a debt security in which an issuer borrows from investors and promises interest, principal repayment, or both under stated terms.
Bond face value is the principal amount used to calculate coupons and usually repaid at maturity, distinct from the bond's market price.
Book-entry securities are ownership positions recorded electronically rather than represented by physical certificates.
A registered bond records the owner's name with the issuer or agent, allowing payments and transfers to be tracked by registration.