What are bonds?
A bond is a debt instrument issued to investors by governments, institutions, or corporations seeking to raise capital directly from the public. It represents a commitment to pay interest at a specified rate and repay the principal under agreed-upon terms.
Fundamentally, a bond serves as proof of indebtedness. It establishes a debtor-creditor relationship between the issuer and the buyer, where the issuer acts as the debtor and the investor (the bondholder) acts as the creditor. A bond is a type of negotiable security.
