Accounting Dictionary

Bearer Bond

When a bearer bond is issued, anyone who has possession of the bond can collect the interest.

A long time ago bonds had coupons on them. Investors would send in the coupons to collect their interest and at the end of the time period they would send in the last coupon to get their principal back. The company had no record of the investors’ names and addresses; they just paid whoever sent in the coupons. These are called bearer bonds. Banks hated them because thieves would break into their banks to steal the bearer bonds out of the safe deposit boxes. Today this type of bond is rarely, rarely issued in the United States.

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