0
0
0
0
1
2
3
$0
A loan to a government or company that pays interest.
A bond is a loan you make to a government or a company. In exchange, the borrower pays you interest (the coupon) and gives your money back on a set date (maturity). Bonds are usually less volatile than stocks.
A 10-year government bond paying 4% gives $40 a year on $1,000, then returns the $1,000 after 10 years.
Bond prices move opposite to interest rates: when rates rise, existing bonds lose value. Bond yields also set the cost of mortgages and loans.