Amber's Financial Blog

What Are Bonds?

A bond is a debt security, Basically just an I.O.U. When you purchase a bond, you are lending money to a government, municipality, corporation, federal agency or other entity known as an issuer. In return for that money, the issuer provides you with a bond in which it promises to pay a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it matures.

There are many types of bonds available for investment. For example; U.S. government securities, municipal bonds, corporate bonds, mortgage- and asset-backed securities, federal agency securities and foreign government bonds.Bonds can be also called bills, notes, debt securities, or debt obligations.