Surety Bond
Categories: Muni Bonds, Bonds
Remember when you were a kid at summer camp and had to pony up a buck to prove your heavy roller status at Friday night's poker game?
Surety bonds are kind of like that.
We repeat: kind of.
A surety bond is an agreement between three parties. One party guarantees that second party will fulfill a promise to the third party.
For example, one signer might guarantee that a small business will honor a government contract. If the small business doesn't meet the contract, the person who signed on may have to pay up.