Bonds are debt securities issued by governments, corporations, or other entities to raise capital. When you buy a bond, you are essentially lending money to the issuer in exchange for regular interest payments (known as coupons) and the return of the principal amount (the face value) at the bond’s maturity. Bonds are often considered safer investments than stocks, especially government bonds, because they typically offer a fixed income stream and repayment of the initial investment.
How Bonds Work
When an entity, such as a government or corporation, needs to raise money, they issue bonds to investors. In return, the entity agrees to pay the i...