A debt security issued by a financial institution, government or other organisation for a fixed term period. At the end of the term bond issuers repay the initial money loaned and most make interest payments. Unlike equities, bondholders do not have any claim to ownership of the company which issues the bond. However, as creditors, bondholders have a greater chance of recovering their money from a bankrupt company. Bonds are graded according to their risk with government bonds generally considered to be the safest and can be traded on exchanges.
This definition is for general information purposes only