A Government Bond is a bond issued by the Government “The Borrower” to the investors “The Lenders” who are from the general public. When the Government issues a bond it divides that bond into smaller proportions that are sold at a price called the face value. The Government promises investors payment of some interests on the borrowed amount; interests are paid annually or semiannually. Investors are also promised repayment of the borrowed amount after the bond matures.
Currently the Government issues bonds that mature after a period of 2, 5, 7, 10 and 15 years, these bonds yield interest rates of 7.82%, 9.18%, 10.08%, 11.44% and 13.5% respectfully.