A bond is debt issued by a government or company. The issuer promises payments under specified terms, rather than a share of ownership. A hypothetical 1,000-unit bond paying a 4% annual coupon pays 40 units a year if the issuer meets its obligations. Selling before maturity can produce a gain or loss; default and changing interest rates matter. Bonds belong here because “fixed income” does not mean a fixed resale price.
Related reading: Stocks.
Source: Bonds.
Image credit: Preußische Staatsschuldenverwaltung/Prussian Debt Administration · Public domain. Resized and JPEG compressed.
