Homonym: bond (Connection)
A bond is a financial instrument that represents a loan made by an investor to a borrower, typically a corporation or government. When an entity issues a bond, it promises to pay back the principal amount on a specific date, known as the maturity date, along with periodic interest payments, called coupon payments. Bonds are often used to raise funds for various projects or operations.
Bonds are considered a safer investment compared to stocks, as they provide fixed returns and have a priority claim on assets in case of bankruptcy. Different types of bonds include government bonds, corporate bonds, and municipal bonds, each varying in risk and return based on the issuer's creditworthiness.