Overview

A bond represents a debt owed by the government, a corporation, or some other entity to you. In exchange for lending money, you are paid interest on the loan. You also want the original amount you lent paid back.

The issuer of a bond promises to give back the total amount borrowed when the bond matures and to pay interest, usually semiannually.

Every bond has a maturity date, which is when you are entitled to receive the face value (par value) of your investment. If you’re investing in a bond, you want assurances that you will be paid back in full and you’ll receive your interest on time. Some bonds are callable, however, which means the issuer can redeem them if certain conditions are met.

The Bond Market >>