What is a bond?

A bond is a debt security that is issued by a company, government or other entity to raise capital. When an investor buys a bond, they are essentially lending money to the issuer of the bond. In return, the issuer promises to pay back the principal amount of the bond at a specified future date, known as the maturity date, and to pay interest on the bond at a specified rate, known as the coupon rate, at regular intervals until the maturity date. Bonds are considered a relatively lowrisk investment, as they are generally less volatile than stocks and provide a fixed income stream to the investor.