A bond is a debt security where the issuer — typically a government or corporation — borrows money from investors and promises to pay a fixed interest rate (coupon) at regular intervals (usually semi-annually or annually) and to return the principal at maturity. Bonds can have maturities ranging from 2 to 30 years.
Unlike T-bills, which pay at maturity only, bonds provide a steady income stream through coupon payments. The bond's market price fluctuates with interest rates — when rates rise, bond prices fall, and vice versa. However, if held to maturity, you receive the full face value regardless of price movements.