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Table of Contents
What Is a Bond?
Issuers
How Bonds Work
Characteristics
Categories
Varieties
How Bonds Are Priced
Bond Prices and Interest Rates
Yield-to-Maturity (YTM)
Example
FAQs
INVESTING
Bond: Financial Meaning With Examples and How They Are Priced
By JASON FERNANDO Updated March 09, 2023
Reviewed by CHIP STAPLETON
Fact checked by KATHARINE BEER
What Is a Bond?
A bond is a fixed-income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.
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