Meaning and issue terms
A bond is a debt security. Its issue establishes the issuer’s obligations to holders, including interest payments, repayment of principal or other payments specified in the terms. The exact set of rights depends on the issue; complex and perpetual instruments can differ substantially from a plain bond with a fixed coupon.
If an investor buys an ordinary bond and holds it to maturity, they expect the specified payments. But receiving the money depends on the issuer’s ability to meet its obligations. If the investor needs to sell the security earlier, its market price may be below the purchase price even without a default.
Risks and review
A bond should not be treated as a bank deposit or a guaranteed way to make money. A fixed coupon does not eliminate interest-rate risk, liquidity risk or credit risk. Before buying, read the issue terms, payment dates, possible early buybacks and restrictions. For comparison, use not only the coupon size but also the price, term, risks and calculated yield. Related reading: [bonds](/guides/bonds/), [maturity and offer](/guides/maturity-and-offer/), [bond scenario](/tools/bond-scenario/) and [default](/glossary/defolt/).