A bond certificate is a formal document that represents a loan made by an investor to a borrower, typically a government or corporation. It outlines the terms of the bond, including the interest rate, maturity date, and the amount borrowed. When an investor purchases a bond, they are essentially lending money in exchange for periodic interest payments and the return of the principal amount at maturity. Bond certificates can be issued in physical or electronic form. They serve as proof of ownership and can be traded in the financial markets. Investors often use bonds as a way to diversify their portfolios and generate steady income, making them a popular choice for conservative investment strategies.