A written, originally unconditional but later conditional, promise to pay back a specific amount (typically the face value) at a determined future date, in addition to interest at a determined or determinable rate on a fixed date(s). Differently stated, this promise represents a debt security whose issuer owes its holder a specific amount of debt, and is obliged to pay interest (the coupon), typically at specific frequent dates, and/ or to repay the face value at a future date (maturity date). Interest is usually paid at fixed intervals such as monthly, semi-annually, or annually.

However, a bond could also be issued at a discount to face value, with the different between the face value at maturity and the discounted face value being the interest amount payable to the holder. Bondholders, in contrast with shareholders, have nothing to do with the operations of the issuer (of course, as long as its actions don’t affect their ability to redeem their debt).