Bonds are investment tools that offer a steady rate of return and are often virtually guaranteed to pay off. To achieve the full value of a bond, the buyer must let it reach its maturity, or pay back, date.

When these investments are issued, the issuers receive the proceeds in a manner similar to a loan. Rather than pay back a lender, however, the issuer pays back those who purchased bonds. This tool can be issued by a variety of entities. The most common are government bonds.

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