Bond

A debt security through which the issuer (a government, municipality, company, or financial institution) undertakes to pay the bondholder a specified amount of money (the principal) on a predetermined date (maturity), as well as agreed interest payments (coupon payments) over the life of the bond. Bonds are used as a capital-raising instrument and provide investors with regular income and the return of invested capital at maturity. Bonds are generally considered lower-risk investments compared to stocks, especially when issued by governments or stable companies, but they still carry the risk of default (credit risk) and market fluctuations in their value.