Define: Bond

UK Accounting Glossary

Definition: Bond

Quick Summary

The name sometimes given to loan finance (more commonly in the USA).

What is the dictionary definition of Bond?

Dictionary Definition

Full Definition

In finance and economics, a bond or debenture is a debt instrument that obligates the issuer to pay to the bondholder the principal (the original amount of the loan) plus interest. Thus, a bond is essentially an I.O.U. (I owe you contract) issued by a private or governmental corporation. The corporation “borrows” the face amount of the bond from its buyer, pays interest on that debt while it is outstanding, and then “redeems” the bond by paying back the debt. A mortgage is a bond secured by real estate.

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