Glossary

Bonds

A bond is a fixed-income investment that represents a loan made by an investor to a borrower (who is typically corporate or governmental). It can be illustrated as an I.O.U. between the lender and borrower that includes the details of the loan and its payments.

Bonds investment

Bonds often constitute part of an investment portfolio and are a complementary product to stocks. Through investment in bonds, it is possible to earn income through interest payments and profit by reselling the bond at a higher price.

However, bond yields - the returns an investor gets for bonds - can fall, and they tend to pay out lower returns than stocks. When the bond reaches maturity, the owner is repaid its face value. In some jurisdictions, it is possible to invest in bonds through derivate products like CFDs (contract for differences).

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