What Is Bond? Meaning & Example
Definition
A bond is a loan you make to a government or company in exchange for regular interest payments and the return of principal at maturity. Bond prices tend to fall when interest rates rise.
Related terms
Yield is the income an investment produces, usually shown as an annual percentage of its price. For bonds, yield moves opposite to price.
Interest RateAn interest rate is the cost of borrowing money or the reward for saving it, shown as a yearly percentage. Central bank rate decisions influence rates throughout the economy.
Yield CurveThe yield curve plots interest rates on bonds of the same credit quality across different maturities. Its shape offers clues about growth and rate expectations.
What is Bond?
A bond is a loan you make to a government or company in exchange for regular interest payments and the return of principal at maturity. Bond prices tend to fall when interest rates rise.
Can you give an example of Bond?
A $1,000 bond paying 4% annually provides $40 of interest each year until it matures.