Fixed interest securities issued by governments (gilts), financial institutions and companies (corporate bonds) to investors. The issuer pays a fixed rate of interest for a fixed number of years (e.g. 7.5 per cent for five years), at the end of which the capital is repaid. Bonds are traded in the open market in the same way as shares. Insurance companies and pensions funds are substantial investors in UK government bonds. Distinguish BONDS (SURETY BONDS) and BONDS (INVESTMENT INSURANCE).