What is a Bond1 min read

A bond is a fixed income instrument that represents a loan made by the investor to a borrow. A bond is a type of I.O.U between the lender and the borrower. 

A bond can be a fixed interest rate bond or a floating interest rate bond. A bond has a coupon payment attached to it which specifies the amount of interest that must be paid by the issuer to the investor. The bond also has a maturity date where the issuer must pay back the principal to the investor. 

Bond prices are inversely correlated to the interest rates. The higher the interest rates rise, the lower the bond price and the lower the interest rates fall, the higher the bond price

Bonds can be issued by governments, states and corporations. Bonds are generally raised to fund expenses such as hiring, infrastructure etc

Bonds can be bought by a variety of organisations such as governments, investment funds and individuals.