A debt security where the issuer borrows money from investors and pays periodic interest.
A bond is a fixed-income security representing a loan made by an investor to a borrower (typically a corporation or government). When you buy a bond, you're essentially lending money to the issuer, who promises to repay the face value (principal) at maturity and pay interest (called the coupon) periodically. Bonds are considered less risky than stocks because they offer predictable income and repayment is prioritized in bankruptcy. Different bond types exist—Treasury bonds (backed by the U.S. government), corporate bonds, municipal bonds, and high-yield bonds—each with varying risk and return profiles. Bond prices move inversely to interest rates: when rates rise, bond prices fall, and vice versa.