Bond

A type of investment that is an IOU or debt. When you buy a bond, you are lending money to the issuer for a period of time. The issuer pays you regular interest payments and agrees to repay your investment (called the “principal”) at a certain date (the “maturity date”). Issuers of bonds include the U.S. government, local governments, and companies. The main types of bonds are corporate bonds, municipal bonds, and U.S. Treasury bonds.