Investing 101 — Lending money in exchange for steady interest.
A bond is essentially a loan you make to a government or company. They pay you interest along the way and return your principal at the end.
Coupon: The interest payment a bond makes to its holder, usually a yearly rate of the bond's face value.
Maturity: The date when the issuer repays the bond's principal and the bond ends.
Bonds are generally steadier and lower return than stocks, which makes them a common tool to reduce the overall risk of a portfolio.
Bond prices move opposite to interest rates. When new bonds pay more, older lower rate bonds become less attractive and fall in price.
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