What is a Bond?

A bond is a loan from investors to a government or company. When you buy a bond, you’re lending them money. 

In return, they usually pay you interest (often called a “coupon”) on set dates and aim to return the original amount (the “face value”) on the maturity date. 

Bond prices can change before maturity: they often fall when interest rates rise, and they can also move if the issuer’s credit strength improves or weakens. 

Common types are government bonds and corporate bonds.