The Basics

What is a “bond”?

Generally, a bond is an investment vehicle that is in many ways quite similar to a loan, debt security, or IOU. When you purchase a bond, you lend money to an issuer, which could be a government, local municipality/entity, corporation, or federal agency. As part of the deal between the bond issuer and the bond buyer, the issuer promises to pay the buyer a specific and stated interest rate during the life of the bond, and to repay the face value of the bond when it becomes due or reaches maturity.


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