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Bond Definition

A bond is a fixed-income security representing a loan made by an investor to a borrower, typically a government or corporation.

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What is a Bond?

Bonds pay periodic interest, known as a coupon, and return the principal at maturity.

They are generally used to generate income and diversify a portfolio alongside other asset classes.

Example of Bond

A government bond that pays 3% annual interest over 10 years returns the original investment at the end of that term.

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