What is a Bond?

A bond is a type of security that represents a loan made to a government, corporation, or other entity. The borrower agrees to pay interest to the lender, or bondholder, in exchange for the loan (finra.org).

Types of bonds

• Short-term bonds: Mature in one to three years 

• Medium- or intermediate-term bonds: Mature in four to ten years 

• Long-term bonds: Mature in more than ten years 

  
  

Why people buy bonds

Stability: Bonds can provide a steady income stream in a portfolio.

Risk diversification: Bonds can help balance out the risk of stock investments.