Options & Bonds
What is Bond?
A loan you give to a company or government that pays you interest
Full Explanation
When you buy a bond, you're lending money to a company or government. They pay you regular interest (the "coupon") and return your principal when the bond matures. Bonds are generally safer than stocks but lower return.
Real-World Example
Buy a 10-year Treasury bond at 4.5% yield — the government pays 4.5% annually and returns your money in 10 years.
Pro Tip
When interest rates rise, bond prices fall. When rates fall, bond prices rise. They move opposite.
Related Options & Bonds Terms
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