In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and is grateful to repay the principal and interest at a later date, termed maturity. Other conditions may also be attached to the bond issue, such as the obligation for the issuer to provide certain information to the bond holder, or limitations on the behavior of the issuer. Bonds are generally issued for a permanent term longer than ten years. U.S Treasury securities issue debt with life of ten years. New debt between one year and ten years is a note, and new debit less than a year is a bill.
A bond is simply a loan, but in the form of a security, although expressions used is rather different. The issuer is equivalent to the borrower, the bond holder to the lender, and the voucher to the interest. Bonds enable the issuer to finance long-term investments with external funds. Certificates of deposit (CDs) or commercial paper are measured money market instruments.
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