In financial terms, bonds are debt investments where an investor loans money to a certain entity (such as a government or a corporation) for a certain time period at a fixed interest rate.
Bonds are somewhat similar to stocks, with one main difference – a stock-holder is an owner of a company (has a certain stake), while the bond-holder is actually lending money to a company.

Companies or governments use the money they receive to finance various activities and projects.

There are some important characteristics of bonds:

1. nominal amount – amount of interest that has to be paid at the end
2. issue price – investors buy bonds at this price
3. maturity date – the date when the issuer has to pay the interest (the nominal amount)
4. coupon – rate of interest that is paid to the bond holder
5. exchangeable bond – can be exchanged for company shares

Bonds can be issued in a foreign currency (if the domestic one is not stable enough), so there are various types: eurodollar bond, samurai bond, shogun bond, bulldog bond and much more.

Bonds are mainly bought and traded by insurance companies or banks, but also by households. Everyone who wants to invest in bods does so through bond funds. The main advantage of buying bonds is an unwritten rule that the value of bonds rises when the stock market goes down. Having in mind that the world stock market has been mostly down lately, investing in bonds seems very bright.