What These Two Bond Types Actually Mean
Government bonds government ke borrowing instruments hoti hain. Corporate bonds companies ke borrowing instruments hoti hain.
Issuer profile alag hone ki wajah se risk perception bhi alag hoti hai. Government bonds ko repayment-security perspective se many private issuers ke comparison me stronger maana jata hai, though price movement phir bhi hoti hai.
Corporate bonds zyada heavily company ki creditworthiness, cash flow strength aur repayment capacity par depend karti hain.
Why Yield Differs Between Them
Agar comparable government bond ke comparison me corporate bond noticeably zyada yield de rahi hai, to woh extra return usually extra risk ko reflect karti hai, free reward ko nahi.
Market issuer uncertainty, credit risk, liquidity differences aur broader conditions ko yield me price karti hai.
Isi liye beginners ko ek question pehle poochhne ki habit dalni chahiye: yeh extra yield kis extra risk ka payment hai?
Risk Layers: Credit, Rate and Maturity
Government bonds me perceived default risk lower ho sakti hai, lekin iska matlab har case me low price volatility nahi hota. Longer maturities rates change hone par meaningful move kar sakti hain.
Corporate bonds rate risk aur credit risk dono carry karti hain. Strong issuers aur weak issuers ko same confidence level nahi milni chahiye, even same broad label ke andar.
Yeh debt mutual funds ke andar bhi matter karta hai. Gilt-oriented product aur corporate-bond-oriented product dono debt bucket me ho sakti hain, lekin yeh same risk problem solve nahi kar rahi hoti.
Common Beginner Mistakes
Ek mistake yeh assume karna hai ki higher-yield corporate debt automatically better hai.
Doosri mistake government bonds ko price terms me fully risk-free keh dena hai.
Teesri mistake different maturities ko aise compare karna hai jaise inka behaviour same ho.
Most Beginners Miss This
Low default risk aur low price volatility same cheez nahi hote. Bond decision me safety, yield, maturity aur liquidity ko saath dekhna padta hai.