Personal Finance August 03, 2007 Print Friendly and PDF

A bond is a debt security, similar to an I.O.U. When purchased, a bond is a loan to some entity. These entities may include corporations, the US government, local municipalities, federal agencies, and foreign governments.

The 'issuer' of the bond agrees to pay the buyer of the bond a specified rate of interest for a pre-determined length of time. The issuer will repay the face value of the bond (the principal) when it "matures," or comes due.

A corporation may use these funds to build a new plant or expand into new markets, while governments may use these funds to build roads, bridges, schools, office buildings or in the case of the federal government, to fund spending.

Connect with us

  • Twitter
  • Facebook
  • YouTube
  • Pinterest


This is where you can find research-based information from America's land-grant universities enabled by



This work is supported by the USDA National Institute of Food and Agriculture, New Technologies for Ag Extension project.