Bond

A bond is a financial instrument businesses or governments use to borrow money in the capital market. Bonds are similar to loans, as they represent a loan made by the investor to the borrower. For borrowers, bonds offer an alternative to loans, especially if the amounts involved are large. Interest payments, the term to maturity and repayment obligations are specified from the outset, i. e. when the investor buys a bond. Bondholders receive regular interest payments (except for zero-coupon bonds) and, after the end of the bond’s term, the invested amount.