Also called fixed income, debt security

Bond

A loan to a company or government, repaid on a fixed schedule with interest. You are a creditor, not an owner, and you get paid before shareholders.

Updated 2026-09-05

A bond is a loan. You lend the issuer money, they pay interest on a schedule, and they return the principal at maturity. You are a creditor rather than an owner, with no vote and no share of the upside.

The single most important mechanical fact about bonds is that price and yield move inversely, always. The coupon rate is fixed at issue, so when market rates rise, the only way an existing bond can compete is for its price to fall until its effective yield matches. See duration for how much it falls.

Bonds matter to equity valuation even if you never buy one. The government bond yield is the risk-free rate rate, which sits underneath every discount rate Angie computes, so the bond market sets the hurdle every stock has to clear.

See also

  • Coupon rate — The fixed annual interest a bond pays, as a percentage of its face value. It never changes, which is why the price has to move instead.
  • Yield to maturity — The total return on a bond held to the end, counting both interest and the pull toward face value. It is the bond's internal rate of return.
  • Duration — How much a bond's price moves for a one-point change in rates. A duration of 7 means roughly a 7 percent fall if yields rise a point.
  • Credit rating — An agency's opinion on how likely a borrower is to repay. Investment grade above BBB−, high yield below it, and the agencies are paid by the issuer.

← See this one in the deck

Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.

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