Bonds are a type of financial instrument used by entities like governments, municipalities, and corporations to raise capital. When you buy a bond, you’re essentially lending money to the issuer in exchange for periodic interest payments and the return of the bond’s face value when it matures. Here are some key aspects of bonds:

1. Issuer: The entity that issues the bond and is responsible for paying back the principal and interest. Common issuers include governments, corporations, and municipalities.
2. Face Value (Par Value): The amount the bond will be worth at maturity, typically $1,000 or $5,000 per bond.
3. Coupon Rate: The interest rate that the bond issuer will pay to bondholders, usually expressed as an annual percentage of the face value. This is typically paid semiannually.
4. Maturity Date: The date when the bond’s principal amount is due to be repaid to the bondholder. Bonds can have short-term (a few months to a few years) or long-term (10 years or more) maturities.
5. Yield: The bond’s annual interest payment divided by its current market price. Yield can fluctuate with changes in interest rates and market conditions.
6. Credit Rating: A measure of the issuer’s creditworthiness, typically assessed by rating agencies like Moody’s, S&P, or Fitch. Higher ratings generally indicate lower risk.
7. Types of Bonds:
   • Government Bonds: Issued by national governments and typically considered low-risk. Examples include U.S. Treasury bonds.
   • Municipal Bonds: Issued by states, cities, or other local governments, often offering tax advantages.
   • Corporate Bonds: Issued by companies. These usually offer higher yields but come with higher risk compared to government bonds.
   • Zero-Coupon Bonds: Sold at a discount to face value and do not pay periodic interest. Instead, they pay the full face value at maturity.
8. Bond Prices and Interest Rates: Bond prices and interest rates have an inverse relationship. When interest rates rise, existing bond prices typically fall, and vice versa.

Bonds can be a useful part of an investment portfolio, often providing more stability and income compared to stocks. However, they come with their own risks, including interest rate risk, credit risk, and inflation risk.