Definition of bond
Etymology
Phonetic variant of band, influenced by Old English bonda.
Pronunciation
Noun
bond (plural bonds)
- (law) Evidence of a long-term debt, by which the bond issuer (the borrower) is obliged to pay interest when due, and repay the principal at maturity, as specified on the face of the bond certificate. The rights of the holder are specified in the bond indenture, which contains the legal terms and conditions under which the bond was issued. Bonds are available in two forms: registered bonds, and bearer bonds.
- (finance) A documentary obligation to pay a sum or to perform a contract; a debenture.
Many say that government and corporate bonds are a good investment to balance against a portfolio consisting primarily of stocks.
- A physical connection which binds, a band; often plural.
The prisoner was brought before the tribunal in iron bonds.
- An emotional link, connection or union.
They had grown up as friends and neighbors, and not even vastly differing political views could break the bond of their friendship.
- (chemistry) A link or force between neighbouring atoms in a molecule.
Organic chemistry primarily consists of the study of carbon bonds, in their many variations.
- A binding agreement, a covenant.
Herbert resented his wife for subjecting him to the bonds of matrimony; he claimed they had gotten married while drunk.
- A sum of money paid as bail or surety.
The bailiff released the prisoner as soon as the bond was posted.
- Any constraining or cementing force or material.
A bond of superglue adhered the teacups to the ceiling, much to the consternation of the cafe owners.
- (construction) In building, a specific pattern of bricklaying.
- In Scotland, a mortgage.
Verb
to bond (third-person singular simple present bonds, present participle bonding, simple past and past participle bonded)
- (transitive) To connect, secure or tie with a bond; to bind.
The gargantuan ape was bonded in iron chains and carted onto the stage.
- (transitive) To cause to adhere (one material with another).
The children bonded their snapshots to the scrapbook pages with mucilage.
- (transitive, chemistry) To form a chemical compound with.
Under unusual conditions, even gold can be made to bond with other elements.
- (transitive) To guarantee or secure a financial risk.
The contractor was bonded with a local underwriter.
- To form a friendship or emotional connection.
The men had bonded while serving together in Vietnam.
- (transitive) To put in a bonded warehouse.
- (transitive, construction) To lay bricks in a specific pattern.
- (transitive, electricity) To make a reliable electrical connection between two conductors (or any pieces of metal that may potentially become conductors).
A house's distribution panel should always be bonded to the grounding rods via a panel bond.
Further reading
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals.
Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is the lender (creditor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Certificates of deposit (CDs) or commercial paper are considered to be money market instruments and not bonds. Bonds must be repaid at fixed intervals over a period of time.
Bonds and stocks are both securities, but the major difference between the two is that stockholders have an equity stake in the company (i.e., they are owners), whereas bondholders have a creditor stake in the company (i.e., they are lenders). Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely. An exception is a consol bond, which is a perpetuity (i.e., bond with no maturity).
References:
- Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.
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