Bond

Bonds represent loans made by investors to borrowers, typically corporations or governments. The borrower issues bonds with specific terms including principal amount, interest rate (coupon), maturity date, and payment schedule. Bondholders receive regular interest payments and return of principal at maturity. Bond prices move inversely to interest rates - when rates rise, bond prices fall, and vice versa. Credit ratings assess default risk, with higher-rated bonds offering lower yields. Bonds provide portfolio diversification, steady income, and capital preservation benefits. They come in various types including government bonds, corporate bonds, municipal bonds, and international bonds, each with different risk and return characteristics.