Bond
Definition
A fixed-income debt instrument where an investor loans money to an entity (government or corporation) for a defined period at a fixed or variable interest rate. Bonds pay regular interest (coupon) and return principal at maturity.
Related Terms
Treasury Bond
A US government debt security with a maturity of 10-30 years. Treasuries are considered the safest investments in the world since they are backed by the full faith and credit of the US government. They pay semi-annual interest.
Yield
The income return on an investment, expressed as a percentage. For bonds, yield is the annual interest relative to price. For stocks, it refers to the dividend yield. Yield and price move inversely for bonds.
Get Smarter About Investing
Free weekly market insights, calculator updates, and investing education.