🎯 Goal: Understand a bond means lending and receiving interest.
You understand a bond is lending for steady interest; bonds usually swing less than stocks but earn less, and still risk the borrower not repaying.
Let’s explore
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Buying a bond means you lend money to a government or company, and they pay you interest regularly.
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Bonds usually swing less than stocks, but their return is usually lower too.
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There is still risk: if the borrower struggles, they may not repay.
Practice activity
⚖️ In your view, which is riskier and which is steadier — stocks or bonds?
Worked example: You compare: a bond is like lending — steady interest, less swing, more stable. A stock is owning a company — swings more, bigger gains/losses. So bonds are steadier, stocks riskier.
Quick quiz
1. Buying a bond means?
→ Lending and receiving interest
2. Compared to stocks, bonds usually?
→ Swing less
3. What risk does a bond carry?
→ The borrower may not repay
4. Holding a bond to maturity, you usually receive?