A bond is like a company-issued IOU with a promise to repay the amount borrowed on certain date.

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A bond is essentially a loan made by an investor to a company or government, where the borrower (issuer) agrees to pay back the borrowed amount (principal) on a specific date, along with regular interest payments. This is similar to an IOU where the borrower promises to pay back the borrowed amount on a set date.

A Bond Is Like a Company-Issued IOU with a Promise