Bond

A bond is essentially an IOU. You lend money to an issuer (a government or corporation), and in return they agree to pay interest and repay the principal on a set schedule.

Bonds are often used for income and stability relative to stocks, but they still carry risk — especially interest-rate risk (prices fall when rates rise) and credit risk (the issuer may struggle to pay). Bond prices and yields move inversely: when prices go up, yields go down, and vice versa.