A "bond" is a debt security issued by an entity such as a corporation, municipality, or government to raise capital. By purchasing a bond, the investor lends money to the issuer in exchange for periodic interest payments, known as coupons, and the return of the principal amount at maturity.
Bonds are considered less risky than stocks because they offer predictable income and have a higher claim on assets in the event of liquidation. They are a key component of diversified investment portfolios, providing stability and income.
The bond market is influenced by factors such as interest rates, credit ratings, and economic conditions. Investors should assess these factors to make informed decisions and align their bond investments with their financial goals.