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Corporate and government entities issue bonds as a way of borrowing money. Investors purchase bonds (lend money) in exchange for interest payments and the promise that the loan will be repaid in the future. A typical bond specifies the date when the loan will be repaid (the maturity date), and the amount of interest to be paid every six months until the bond matures (the coupon).

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Exactly What is a Bond?

Various entities issue bonds to borrow money. Of course, corporations issue bonds to increase their cash flow. If a corporation goes bankrupt, it may not be able to repay its outstanding loans.

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What Are the Different Types of Bonds?