Bond
A loan to a government or company that pays interest at set intervals and repays the original sum on a fixed date.
Also called: fixed-income security · debt security
A bond is a tradable IOU. The issuer, such as a government or a company, borrows money from investors and promises two things in a legal document: to pay interest, called the coupon, on a set schedule, and to repay the face value, also called par or principal, on a fixed maturity date. After issue, bonds trade between investors on secondary markets, so their price moves from day to day even though the payments the issuer has promised stay the same.
For an investor, the attraction is predictability: if the issuer pays in full and you hold to maturity, you know in advance what you will receive. The two main risks are interest rate risk and credit risk. When market interest rates rise, existing bonds with lower coupons become less attractive, so their prices fall; when rates fall, prices rise. Credit risk is the chance the issuer cannot pay. A common misunderstanding is that bonds cannot lose money. They can, especially long-dated bonds when rates rise sharply, or bonds from weak issuers.
General education, not personal financial, tax or legal advice.
Guides that go deeper
Where bond comes up in practice.
Bond Ladders Explained: Locking In Yields Across Time
Buying bonds that mature in different years rather than all on one date changes how much of your outcome depends on the level of interest rates on a single morning.
Bonds & Fixed IncomeTIPS and Inflation-Protected Bonds Explained
Inflation-linked bonds adjust their principal with a price index, which sounds like total protection — until you meet real yields, breakeven rates, and a quirk called phantom income.
Bonds & Fixed IncomeTreasury Bonds vs. Corporate Bonds: Key Differences
Both pay you interest for lending money — but a U.S. Treasury bond and a corporate bond carry very different levels of risk and reward.