Definition:
Bond
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A bond is a general term for a tradable debt security issued by governments and companies as a means of raising capital. The bond represents a guaranty from its issuer to its holder to repay capital at a future specified date (the maturity date) at fixed rate of interest (also known as the coupon).Bonds offer the greatest certainty of income, (although some bond issuers may default on payments) but may fail to keep pace with inflation. If a bond is held to maturity, its value can be easily determined by the scheduled payments over the life of the loan. In the time between issue and maturity, however, a bond's value can be volatile. As a bond's price falls, its yield (the income expressed as a percentage of the capital value) increases, and vice versa.
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