bond in finance

A bond is like an IOU or a loan. When you buy a bond, you are loaning money to a company or a government. In return for your loan, the company or government will pay you back the money you lent them (the "principal"), plus interest (the "coupon"). The interest is usually paid every year and the company or government will pay you back the loan (the principal) at the end of the bond's term, which is usually 10 or 30 years.