Bond

A bond is a type of debt instrument in which the issuer agrees to pay a specified amount of interest and to repay the principal amount at maturity. The market value of a bond can fluctuate with changes in interest rates; typically, as rates rise, the value of existing bonds decreases. If an investor sells a bond before maturity, its value may be higher or lower than the initial purchase price. However, if an investor holds a bond until maturity, they will receive both the interest payments due and their original principal, provided that the issuer does not default. It is important to note that investments seeking higher yields often entail greater risk.