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A bond is a legal contract in which a borrower such as a government, company or institution issues a certificate by which it promises to pay a lender a specific rate of interest for a fixed duration and then redeem the contract at face value on maturity. In theory, corporate bonds are safer than stocks because they have a fixed maturity and are repaid before any payments are made to shareholders. But if a company fails its bond holders may suffer just as much as its shareholders.
See also: Convertible Bond, Multiplier Bond, Bearer Shares/Bonds, Vanilla Bond, Bullet Bond, Samurai Bond, Shogun Bond, Yankee Bond, Zero Coupon Bond, Subordinated Debt, Fixed Income, Senior Secured Debt, Senior Unsecured Debt, Coupon, Debt, Treasury Bond, Treasury Bill, Treasury Note, Treasuries, Credit Rating