Written by Bonds are essentially loans made to governments, municipalities, or corporations. When you buy a bond, you’re lending money to the issuer, and in return, the issuer agrees to pay you periodic interest (called the coupon) and return your principal at the bond’s maturity date. Bonds are typically less risky than stocks but offer lower returns. The price of a bond can fluctuate based on interest rates, credit ratings, and the issuer’s financial health. Bonds are often used by investors to provide income and reduce risk in their portfolios.
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