A bond is a loan from an investor to a borrower.  This loan will have a pre-determined interest rate (making it less risky than purchasing stock) and will be paid off in a pre-determined amount of time (maturity date).  Bonds are considered to be debts.  

A borrower may need more money than a banking system could afford to loan.  The borrower could instead issue bonds to the public for the chance to invest in whatever it is the borrower needs the money for.  If a bond’s maturity date was 10 years, and each bond was worth $1,000 with the pre-determined interest rate being 9%, then each investor would receive $90/year in interest for every bond he/she owned.  At the end of the 10 years, they would get back their original $1,000/bond investment, plus they would’ve received an additional $900 in interest payments over that 10-year period.  

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