A bond is an IOU that can change hands before its repayment date.
01
Go deeper
The issuer borrows; the investor lends. Terms specify payments and maturity. Prices can move before maturity, and repayment depends on the issuer meeting its obligations.
02
Make it concrete
Hypothetical illustration. A hypothetical $1,000 bond pays a 4% annual coupon: $40 a year before fees and tax, assuming payment is made.
03
When you read a headline
A fixed coupon does not mean a fixed resale price or freedom from default risk.