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What is a bond?

A bond is an investment that pays a fixed rate of return through interest or dividend income. They’re often used to balance equity risk, provide income, and hedge against inflation.

Bonds are generally stable options for investors. Their fixed rates of return can provide safety for risk-averse investors, and they can usually provide downside protection for an equity-heavy portfolio.

Bonds are the most common type of fixed income, and there are different types: corporate, treasury, high-yield, and municipal. They also have varying durations and risk levels, which can serve different roles in a well-diversified portfolio.