Bond
Also called: bonds, treasury bond, fixed income
A bond is a loan to a government or company that pays the lender interest (the coupon) and returns the full amount (the face value) at a set date.
Bond prices move opposite to interest rates: when rates rise, older bonds paying less become worth less. US Treasury bonds are treated as the safest investment in dollars.
Related terms
- Yield: Yield is the income an investment pays each year as a percentage of its price, such as a bond's interest or a stock's dividends.
- Interest rate: An interest rate is the price of borrowing money, stated as a percentage of the loan per year.
- Risk-free rate: The risk-free rate is the return on an investment with no default risk, usually taken as the yield on short-term US Treasury bills.
Practise with $10,000 in play money
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