• Bonds are units of corporate debt issued by companies and securitized as tradable assets.

  • A bond is called a fixed income instrument because bonds traditionally paid a fixed interest rate (coupon) to debt holders.
  • Variable or floating interest rates are also quite common these days.
  • Bond prices are inversely related to interest rates: when rates rise, bond prices fall, and vice versa.
  • Bonds have maturities after which the principal must be paid in full, otherwise there is a risk of default.