1. A bond is a debt instrument
When you buy a bond, you are generally lending money to a government, company or other issuer under defined terms.
Tip: Bondholder = lender, not owner.
2. Bonds can pay coupon and return principal
Depending on structure, the issuer pays interest or coupon and repays principal at maturity. Some bonds are zero-coupon or have other structures.
Tip: Read the exact cash-flow terms.
3. Bond prices can move before maturity
Market interest rates, issuer credit quality and liquidity can change the resale price. Holding to maturity does not remove issuer default risk.
Note: A bond is not automatically a fixed deposit.
4. Yield is the better comparison concept than coupon alone
A bond bought above or below face value can have a yield different from its coupon rate.
Tip: Coupon tells cash payment; yield connects price and return.
5. Quick check
Buying a corporate bond usually makes you what?
Answer: B - A bond represents debt owed by the issuer to the investor.