Bonds

Bonds are fixed-income securities that represent a loan made by an investor to a borrower, usually a corporation, municipality, or government. When investors purchase bonds, they are essentially lending money in exchange for periodic interest payments, known as coupon payments, and the return of the bond's face value at maturity. Bonds are commonly issued to raise capital for various purposes, such as funding infrastructure projects, expanding business operations, or managing existing debt. They can be categorized into different types, including government bonds, corporate bonds, municipal bonds, and treasury bonds, each with varying risk levels and interest rates.

Investing in bonds is often viewed as a safer alternative to stocks, making them attractive for conservative investors seeking stable income and capital preservation. While bonds typically offer lower returns compared to equities, they can provide diversification within an investment portfolio. Additionally, bonds can serve as a hedge against stock market volatility, as they tend to be less sensitive to economic fluctuations. Understanding the terms and conditions of bonds, including their duration, yield, and credit ratings, is crucial for making informed investment decisions in the fixed-income market.