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Placeholder Lesson:
** This lesson is generated with AI assistance and approved by Danny Nelson. This lesson will communicate the essence of the topic for now until Danny can create a full lesson. **
A bond is a fixed-income investment where an investor lends money to a borrower, such as a corporation or government, in exchange for periodic interest payments and the return of the principal amount at maturity.
When issued, bonds have a face value, coupon rate determining the interest, and a maturity date when the loan is repaid.
There are various types, including government bonds like U.S. Treasuries, which are low-risk, and corporate bonds, which offer higher yields but carry more default risk.
Bonds can be traded on secondary markets, where their prices fluctuate based on interest rates, credit ratings, and economic conditions.
Investing in bonds provides steady income and diversification, though they are sensitive to inflation and interest rate changes.