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Bonds

A bond is a debt security. It is lending money to a corporation, government or another entity issuing the bond. As compensation for the loan, you receive interest at a specified rate. The interest may be paid either at specific periods in the life of the bond or when the bond matures. The bond principal is repaid at maturity. Bond discounts refer to the difference in the market price of the bond over the face value. The full face value is still repaid to the bond holder at the end of the life of the bond.