Definition of 'Bond'
A corporation or government body issues a bond to raise (debt) capital. The bondholder receives a note that entitles them to repayment on a specific date, as well as interest payable, either as an annuity (coupon bond) or at the end of the bond's life, together with the principal amount (zero coupon bond). A debenture bond is backed by the credit rating/good faith of the issuing entity, while a mortgage bond is backed by some sort of collateral