A fixed-income product commonly referred to as a bond or debenture is a loan made by an investor to the government or a corporate borrower. The borrower, or issuer, promises to pay an agreed interest, called the coupon, on a predetermined basis until a set date. The issuer returns the principal amount, also called the face or par value, to the investor on the maturity date. Individual bonds can be useful in a strategy that seeks to preserve capital and generate a predicable return when they are held to maturity, subject to issuer credit risk.
