Income Bonds

Income bonds are a type of debt security where the issuer agrees to pay interest only if they generate enough income to do so, rather than fixed interest payments regardless of financial performance. They are typically used by companies or municipalities seeking financing with less immediate burden, as payments depend on actual earnings. Investors in income bonds accept the risk that they may receive little or no interest if the issuer's income is insufficient, but they benefit if the issuer performs well. These bonds are often considered riskier than traditional bonds due to their variable interest payments.