Bond

A form of IOU that certifies that the holder has loaned money to a corporation or government and describes the terms of the loan. They are an interest-bearing corporate or government security that requires that the issuer will pay the holder of the bond a specified sum of money, usually at fixed intervals, and will repay the principal amount of the loan at maturity. Only corporations can issue stocks, but bonds can be issued by governments or corporations.

A secured bond is backed by collateral, whereas as an unsecured bond or debenture is backed by the full faith and credit of the issuer, not by any specified collateral.