Bond
A security representing an issuer's borrowing under specified terms.
Plain languagePractical exampleConnected reading
01
What is it?
A security representing an issuer's borrowing under specified terms.
02
Why does it matter?
Coupon, maturity, credit risk and market rates shape total return.
03
How should it be read?
Focus on price, yield to maturity, duration and issuer risk, not only face value.
04
Common mistake
Mistaking the coupon rate for the investor's guaranteed annual return.
A simple example
When market rates rise, an existing fixed-coupon bond generally falls in price.