Glossary
Bond: definition
A bond is a way of lending to a government, a company or a project. You are promised interest and a return of principal on a schedule. The promise can be broken, and the price moves when interest rates or credit views change.
In practice
Government bonds of stable countries are not the same risk as a high-yield corporate bond, even though both are bonds. Prices move inversely to yields: when yields rise, existing bonds with lower coupons fall in price. Holding to maturity removes the price swing only if the issuer pays and you do not need the money earlier. Funds of bonds have no single maturity unless they are designed that way.
A worked example
A 10-year government bond bought for income can show a painful mark-to-market loss in a year of rising rates, then recover if held and if the issuer pays. The interim loss is real if you must sell.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- Investor.gov — checked 2026-10-13
- International Monetary Fund — checked 2026-10-13