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What is a bond?

A bond is a debt obligation of a government or corporation on which the issuer promises to pay the holder a specified amount of interest based on a coupon rate, for a specified length of time and to repay the loan on its maturity. Strictly speaking, assets are pledged as security for a bond issue, except in the case of government "bonds", but the term is often loosely used to describe any funded debt issue.

Examples: Typically, corporate bonds or debentures pay more interest than government bonds because they carry greater risk. You would expect a higher yield on a corporate bond than a government bond.