Bond
Also called: bonds, debenture, debentures, coupon, government bond
A loan to a government or company that pays agreed interest, called the coupon, and repays the face value at maturity.
A bond's market price moves with interest rates and the issuer's creditworthiness. When rates rise, existing bonds with lower coupons become less valuable and their prices fall, longer bonds most of all.
Example
A 10-year bond paying ₹70 a year on ₹1,000 falls to about ₹933 if similar new bonds pay 8%.
Learn more in these lessons
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