[This is part of the series: The Complete Guide To Economics 101.]
What are bonds?
Bonds are assets that give the buyer the legal right to future payments.
Depending on the type of bond, these payments can be fixed or variable, long-term or short-term, and payout in a number of different ways.
To make it more complicated, many bonds are traded on financial exchanges and yields are impacted by the reserve banks setting short-term interest rates.
They are another type of financial asset.
If it’s easier, just think of a bond as a complicated IOU certificate.
