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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.
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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.
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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.

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

More terms

Investment Return

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

Earnings per share

We look at what earnings per share mean and how to calculate it

After-hours trading

Trading outside of a stock exchange's opening hours.

Balance sheet

A summary of a company's finances, including its assets, liabilities and shareholder equity.

DMO

The United Kingdom Debt Management Office. It’s an executive agency responsible for managing the government’s debt and cash needs, primarily through issuing gilts and Treasury bills.

Maturity value

What's the maturity value of a bond?

Exchange-Traded Fund (ETF)

A collection of investments, pooled into a single fund that can be bought and sold on a stock exchange.

Equity

The amount of money a company would be left with by subtracting its liabilities from the value of its assets.

Leverage

A method of trading using borrowed money that usually involves a very high level of risk.

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