InsiderFlow › Glossary › What is a bond?
A bond is a loan you make to a government or a company: in exchange you receive periodic interest and your capital back at maturity.
The issuer of a bond (a government, like US Treasuries, or a corporation) commits to paying you a periodic coupon and returning the face value at maturity. It's the classic instrument for the "defensive" part of a portfolio.
A bond's market price moves inversely to interest rates: when rates rise, existing bonds are worth less, because newly issued ones pay higher coupons.
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Safer than stocks but not risk-free: the issuer's creditworthiness (rating) matters, as does interest-rate risk if you sell before maturity.
Prices of existing bonds fall, because new issues offer higher yields.