Bond Bond
A debt instrument that is a "promise to pay" issued by corporations, federal and state governments, and municipalities to raise capital. The bond issuer promises to pay the holder of the bond the principal amount of the loan when the bond matures and a fixed rate of interest periodically during the term of the bond. A coupon bond obligates the issuer to make interests payments, called coupon payments, over the life of the bond, then to repay the principal at maturity.