A loan you make to a government or company that pays fixed interest and returns principal at maturity.
Bond prices move opposite interest rates — when rates rise, existing lower-rate bonds become less attractive and their prices fall. Bonds are typically the lower-volatility counterweight to stocks in a portfolio.
Example: A 10-year Treasury bond yielding 4.5% pays roughly $45/year per $1,000 face value.
FAQ
What is Bonds in simple terms?
Bond prices move opposite interest rates — when rates rise, existing lower-rate bonds become less attractive and their prices fall. Bonds are typically the lower-volatility counterweight to stocks in a portfolio.