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Bonds

Bonds are assets that pay a fixed rate of return and are issued by large organizations, such as governments, companies or banks. Governments and other organizations issue bonds in order to raise capital; they are essentially borrowing money from those who purchase the bonds and agreeing to pay back that amount, with interest, at a later, set date. Stocks can yield a much higher return on investment than bonds, but bonds are less risky. Some types of bonds also pay interest over time, providing a periodic, reliable return.