Bonds are debt securities issued by entities to raise capital, where the issuer promises to pay back the principal amount along with interest over a specified period. Discounts and premiums refer to the differences between the bond's face value and its market price; a bond is sold at a discount when its market price is below face value, while it is sold at a premium when above face value. Understanding these concepts is essential for assessing the financial health of entities and making informed investment decisions.
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