Bonds are debt securities that are issued by companies, municipalities, and governments to raise capital. They pay periodic interest to bondholders and return the principal when the bonds mature.
When you buy a bond, you are essentially lending money to the issuer in exchange for interest payments and the return of principal at maturity. The issuer is usually required to pay interest to the bondholder at regular intervals, often semi-annually or annually.
The price of a bond can vary depending on a number of factors, including the creditworthiness of the issuer, the terms of the bond (e.g., the interest rate and maturity date), and market conditions. Bond prices and yields have an inverse relationship: when bond prices go up, yields go down, and vice versa.
Bonds can be a useful investment for people who are looking for a relatively safe and predictable way to earn a return on their money. However, it’s important to understand that bonds are not risk-free and can fluctuate in value.
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