/

Bond

What is a bond?

Learn what a bond is

When governments and companies want to raise money, they’ll often do so by issuing bonds.
‍

Bonds are effectively promissory notes. In return for buying bonds, investors will receive the money they put in back, plus interest.
Investors usually buy bonds because they promise a fixed return, in the form of interest, that is supposed to be paid back at one or several preset dates.
‍

As the interest rate paid on bonds is usually fixed and pre-set, it’s common for bonds to be referred to as ‘fixed-income’ investments. Today, not all bonds have a fixed interest rate. Many are now issued with variable or floating interest rates, which change over time.

‍

Deep dive: What are bonds and why investors buy them?

More terms

Zero-Sum Game

A situation in which one person's gain is another's loss.

Unicorn

A startup valued at over £1 billion. They are rare, hence the name.

Gross Margin

The difference between a company's revenue and the cost to produce its goods/services, divided by revenue.

Investment Return

The amount of money made or lost from an investment. Usually expressed as a percentage.

Net asset value

Mutual funds and investment trusts are priced on their net asset value (NAV).

Profit and Loss Statement (P&L)

A statement that summarises firm's expenses, costs, and revenues incurred during a time period. AKA income statement.

Bed & ISA

Understand what Bed and ISA is and how it works

Synthetic ETFs

An ETF that that reproduces the return of an index through the use of swaps.

Money laundering

A method of moving money obtained illicitly through the financial system so it can be used legally.

You’re just minutes away from commission-free investing

When you invest, your capital is at risk

Freetrade does not provide investment advice and individual investors should make their own decisions or seek professional advice. The value of investments can go down as well as up and you may receive back less than your original investment. Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority (FCA reg. no. 783189). Registered in England and Wales (no. 09797821).

© 2026 Freetrade, All rights reserved. The Apple logo is a trademark of Apple Inc. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.