Skip to content
teloria
← Back to the glossary

Glossary

Bond

A bond is a loan to a government or a company: you lend the money, the borrower pays you interest for a set period, then repays the amount borrowed.

Updated September 15, 2026

A bond is a loan you make to a government or a company. You hand over money for a set period, the borrower pays interest along the way, often in payments called coupons, and at maturity it repays the amount borrowed, known as the face value.

For example, a bond with a face value of $1,000 and a coupon rate of 5 percent pays $50 a year and repays the $1,000 at maturity.

Bonds are often held inside funds that hold many bonds at once, including funds in 401(k) plans. Bonds are not bank deposits and carry no FDIC insurance. The borrower can default, meaning fail to pay. If you sell before maturity, the price may differ from face value; one reason is that bond prices generally fall when interest rates rise. Inflation can reduce what the fixed payments buy.

Related terms

Used in these lessons

How this definition was made

  • Written by an AI model (Claude) following Teloria's editorial standard.
  • Every factual claim was checked by a separate AI fact-check against official US government and regulator sources.

Official sources consulted

  • investor.gov · /introduction-investing/investing-basics/investment-products/bonds-or-fixed-income-products/bonds
  • investor.gov · /introduction-investing/investing-basics/glossary/coupon-payment
  • sec.gov · /files/ib_corporatebonds.pdf
  • dol.gov · /node/63354
  • fdic.gov · /resources/deposit-insurance/financial-products-not-insured
  • investor.gov · /introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-86