Honesty Bond

AAA

DEFINITION of 'Honesty Bond'

A bond posted by an organization or professional insuring the honesty and integrity of the bond issuer and/or its employees. An honesty bond insures the policy holder against theft, fraud and other dishonest acts by employees.

Also known as a "fidelity bond" or a "commercial blanket bond".

INVESTOPEDIA EXPLAINS 'Honesty Bond'

Most financial professionals are "bonded", which means there is protection against dishonest or illegal acts by employees. This bond, in turn, can be used to cover losses to the business or to consumers caused by dishonesty on the part of those employees. When used properly, honesty bonds can build trust with customers and invoke fiduciary responsibility among all employees.

RELATED TERMS
  1. Banker's Blanket Bond

    A fidelity bond purchased from an insurance broker that protects ...
  2. Wire Fraud

    A situation where a person concocts a scheme to defraud or obtain ...
  3. Errors And Omissions Insurance ...

    A professional liability insurance that protects companies and ...
  4. Embezzlement

    A form of white-collar crime where a person misappropriates the ...
  5. Blanket Bond

    Insurance coverage carried by brokerages, investment bankers, ...
  6. Ponzi Scheme

    A fraudulent investing scam promising high rates of return with ...
RELATED FAQS
  1. Why does the efficient market hypothesis state that technical analysis is bunk?

    The efficient market hypothesis (EMH) suggests that markets are informationally efficient. This means that historical prices ... Read Full Answer >>
  2. How do you use a financial calculator to determine present value?

    Determining the present value of a given cash flow is based on the concept that money today is inherently worth more than ... Read Full Answer >>
  3. What are the most effective ways to reduce moral hazard?

    There are a number of ways to reduce moral hazard, including the offering of incentives, policies to prevent immoral behavior ... Read Full Answer >>
  4. What is the theory of asymmetric information in economics?

    The theory of asymmetric information was developed in the 1970s and 1980s as a plausible explanation for common phenomena ... Read Full Answer >>
  5. How does market risk differ from specific risk?

    Market risk and specific risk are two different forms of risk that affect assets. All investment assets can be separated ... Read Full Answer >>
  6. How is perpetuity used in the Dividend Discount Model?

    The basic dividend discount model (DDM) creates an estimate of the constant growth rate, in perpetuity, expected for dividends ... Read Full Answer >>
Related Articles
  1. Economics

    Online Investment Scams Tutorial

    To bamboozle someone out of their money is an age-old ruse. Learn about some of the gimmicks modern-day swindlers use and avoid becoming a statistic.
  2. Personal Finance

    Biggest Stock Scams

    These companies betrayed their investors and in many cases, the financial fallout wasn't pretty. Would you have seen it coming?
  3. Home & Auto

    Are My Investments Insured Against Loss?

    Money invested in a brokerage account has some protection, but that doesn't mean you can't lose it.
  4. Personal Finance

    4 Dishonest Broker Tactics And How To Avoid Them

    Protecting yourself from unscrupulous practices means knowing how to spot them.
  5. Insurance

    Four Big Investor Errors

    These simple lessons can cut your losses.
  6. Entrepreneurship

    Stop Scams In Their Tracks

    Find out how to protect yourself and your loved ones from financial fraudsters.
  7. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  8. Economics

    Modified Internal Rate of Return (MIRR)

    Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.
  9. Economics

    Understanding the Fisher Effect

    The Fisher effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate.
  10. Fundamental Analysis

    Explaining the Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center