What are bonds?

1 Answer
May 3, 2018

A bond is a debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time.


When you buy a bond, you are lending to the issuer, which may be a government, municipality, or corporation. Bonds are one way companies or governments finance short-term projects. The bonds state how much money is owed, the interest rate being paid and the bond's maturity date.