Bond
A tradable debt instrument under which the issuer borrows a sum and agrees to pay interest and repay the principal at maturity.
Formula
Bond Price = Present Value of all Coupon Payments + Present Value of the Principal Repayment
Unit
₹
In depth
A bondholder is a lender, not an owner, which sets the whole risk profile: the return is capped at the agreed interest, and the claim ranks ahead of equity in a winding-up. Bonds are not safe in the way deposits are — their prices move inversely to interest rates, so a bond can be held to maturity for its full return or sold at a loss along the way. The two risks that matter are credit, whether the issuer pays, and duration, how much the price moves when rates change. Confusing a bond's coupon with its yield is the most common error, and the two coincide only when the bond trades exactly at par.
Worked example
A bond with a face value of ₹1,000 and an 8% coupon pays ₹80 a year for five years, then repays ₹1,000. Bought at ₹950, the total received is 5 x 80 + 1,000 = ₹1,400 against ₹950 paid.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Bond” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.