Listen to a Business English Dialogue about Insured bonds
Carl: Hey Hailey, have you heard about insured bonds?
Hailey: Hi Carl, yes, insured bonds are bonds where an insurance company guarantees payment of interest and principal in case the issuer defaults.
Carl: Right, so they provide an extra layer of security for investors?
Hailey: Exactly. Investors are more willing to buy insured bonds because they know they’re protected even if the issuer faces financial difficulties.
Carl: That makes sense. Is there a cost associated with this insurance?
Hailey: Yes, the issuer pays a premium to the insurance company for this coverage, which is reflected in the yield offered to investors.
Carl: Ah, so investors might receive slightly lower yields compared to uninsured bonds, but they have the peace of mind knowing their investment is safer.
Hailey: Exactly. It’s a trade-off between yield and security for investors.
Carl: Got it. Thanks for explaining, Hailey. Insured bonds sound like a good option for risk-averse investors.
Hailey: You’re welcome, Carl. If you have any more questions about bonds or finance in general, feel free to ask.