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What is a Bearer Bond?

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Sometimes referred to as a coupon bond, the bearer bond operates much like any other sort of bond. What is different is that the bearer bond is almost always an unregistered bond. Also, this type of negotiable bond has a difference when it comes to who received the benefit of the interest and the principal of the bond. Rather than the benefits being paid to the entity that originally purchased the bearer bond, they are paid to the person who is the holder. Here is some information about how the bearer bond works, and why the arrangement may be desirable in some cases. Bearer bonds are accompanied with a series of coupons that are associated with the bond. Each one of these coupons usually represents a single interest payment that may be collected on the bond. The coupons are usually in the possession of the holder, who is free to present a single coupon periodically. Generally, a coupon may be presented for payment once or twice in a calendar year. The issuer of the bearer bond ... more
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Bearer bonds, also known as coupon bonds, allow the owner or "bearer" of the coupon to collect interest by presenting the clipped coupon to the issuer's paying agent. Bearer bonds are extremely rare and were essentially eliminated by the Tax Equity and Fiscal Responsibility Act of 1982. According to the Bureau of the Public Debt, .14% of all outstanding marketable securities are in bearer form. Bearer bonds do not require the issuer's transfer agent to record the bondholder's name. Title to the bearer security passes on delivery. Bearer bonds are as liquid as cash and, when they were popular, were often used to shift ownership of corporations so as to minimize tax consequences. It was this attribute that led to their demise in 1982 in the United States. Positive Attributes • Issuer's BenefitsBearer bonds require less paperwork on the part of the issuer's transfer agent than do other, similar securities. Since bondholder names are not recorded, the issuer does not have to send annual ... more
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Bearer bonds, also known as coupon bonds, allow the owner or “bearer” of the coupon to collect interest by presenting the clipped coupon to the issuer's paying agent. Bearer bonds are extremely rare and were essentially eliminated by the Tax Equity and Fiscal Responsibility Act of 1982. According to the Bureau of the Public Debt (http://www.publicdebt.treas.gov), .14% of all outstanding marketable securities are in bearer form. Bearer bonds do not require the issuer's transfer agent to record the bondholder's name. Title to the bearer security passes on delivery. Bearer bonds are as liquid as cash and, when they were popular, were often used to shift ownership of corporations so as to minimize tax consequences. It was this attribute that led to their demise in 1982 in the United States. more
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