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📘 A loan becomes a tradable promise

Look at a museum bond certificate: beneath the decoration is a loan. An issuer borrows money, promises interest, and returns principal at maturity. The buyer lends, not owns.

3
lessons
~15 min
to learn
Adults
level
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What you’ll learn

  1. The bond contractIdentify a bond's issuer, face value, coupon, maturity, and position as debt rather than ownership.A bond is a time-bounded lending contract with scheduled payments and a promised principal amount.
  2. Price, rate, and yieldExplain why bond prices, market rates, yields, and maturity sensitivity are connected.Markets discount a bond's future cash flows, making price and yield change as required returns move.
  3. Issuers and risksDistinguish issuer types and describe credit, rate, inflation, liquidity, and call risks.The bond contract is only one part of the outcome; borrower quality, market conditions, and time shape what the promise is worth.

Questions this course answers

What does a bond buyer normally provide to the issuer?

A bond is a debt security: the buyer lends money and receives a contractual claim to interest and repayment.

Put the basic fixed-rate bond cash flows in order.

Issuance starts the contract, scheduled payments follow, trading can change the price, and maturity ends the planned life with principal repayment.

Match each bond term with what it describes.

These terms refer to different parts of the bond: promised principal, stated interest, price-implied return, and the endpoint date.

Why do fixed-rate bond prices usually fall when market interest rates rise?

Price adjusts so different payment streams can compete in the same market.

Grounded in trusted sources

  • Investor.gov, Bonds - FAQs, https://www.investor.gov/introduction-investing/investing-basics/investment-products/bonds-or-fixed-income-products/bonds
  • Investor.gov, What Are Corporate Bonds?, https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/what-are
  • OpenStax, Principles of Finance 10.1 Characteristics of Bonds, https://openstax.org/books/principles-finance/pages/10-1-characteristics-of-bonds
  • OpenStax, Principles of Finance 10.2 Bond Valuation, https://openstax.org/books/principles-finance/pages/10-2-bond-valuation
  • U.S. Treasury, FAQs About Treasury Marketable Securities, https://www.treasurydirect.gov/help-center/marketable-faqs/

Every Wunder lesson is built from real, reputable sources — never invented.

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