What is Bond?
A bond is a loan you make to a government or a company. The borrower, called the issuer, usually pays you interest on a set schedule and promises to repay the original amount on a set date. You can hold a bond until that date or sell it to someone else before then at whatever the market will pay.
Why Bond matters
Bonds are the main alternative to stocks in most portfolios, and they behave differently enough to change how a portfolio rises and falls.
Related terms
Lessons that use this term
- Bonds explained: coupons, yields and why prices move
- Asset allocation: choosing your mix of stocks, bonds and cash