Definition

A type of loan you make to a government or company in exchange for regular interest payments and the return of the bond’s face value at maturity.

What to consider

  • Examine the bond’s credit rating and maturity to assess its risk.
  • Consider how current interest rate trends might affect your returns.
  • Diversify your bond investments to balance risk and reward.

Real world scenarios

  • For a secure addition to her portfolio, Grace invested in a bond from a well-known corporation, anticipating regular interest payments over several years.

Related terms

Investments & Retirement