A gilt-edged security (gilt) is a government bond - a security or stock issued by the government paying a fixed rate of interest and redeemable on a set date for a set amount, usually £1,000.
Gilts are considered one of the safest long-term investments, as the government is unlikely to default on its payments. As with most fixed interest-securities or bonds, the price of a gilt is sensitive to interest rates and inflation. As rates rise the price of gilts will fall to bring their yield in line with the market, and as interest rates fall the price of gilts will rise.
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