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What Is a Bond? A Beginner's Guide to How Bonds Work

The article from MSN Money provides a comprehensive beginner's guide to understanding bonds. It explains that a bond is essentially a loan made to an organization or government, where the issuer promises to pay back the borrowed funds with interest on a specific date. Bonds are used by entities to raise capital for various projects or operational needs. The guide details how bonds work, including the concepts of face value, coupon rate, maturity date, and yield. It discusses different types of bonds such as government, corporate, municipal, and zero-coupon bonds, each with unique characteristics and risk levels. The article also covers the benefits of investing in bonds, like providing a steady income stream and being generally less volatile than stocks, though they come with their own risks like interest rate risk, credit risk, and inflation risk. Additionally, it touches on how bonds can be part of a diversified investment portfolio, offering stability and income, especially appealing to conservative investors or those nearing retirement. The piece concludes by emphasizing the importance of understanding one's investment goals and risk tolerance when considering bonds as an investment option.

Read the Full MSN Article at:
[ https://www.msn.com/en-my/money/savingandinvesting/what-is-a-bond-a-beginner-s-guide-to-how-bonds-work/ar-AA1yVEGx ]