What Is A Bond?

A bond is a security, generally issued for a period of more than 1 year, that is used to raise capital by borrowing from a lender. The U.S. and foreign governments, states, cities, corporations, and many other entities sell bonds.

Bonds generally pay a stated rate of interest over a specific period of time, and issuers promise to pay that interest along with a return of the investors’ principal when the bond matures.