Bond refers to an agreement between two or more parties. In the context of finance, these two parties are called Borrowers and Lenders.
Examples of borrowers are Goverment and Corporates. Government borrows money for building infrastructures and Corporate borrow money for expanding their business.
As a proof of the borrowed amount, borrower issues a physical document which is called as bond, however, it is issued in an electronic form now. Therefore, borrower is also called as the Issuer.
The borrowed amount is called as the Principal. The Borrower/Issuer will keep paying interest/coupon for the borrowed Principal amount as per the agreed percentage periodically, example-yearly.
At the time of maturity, the principal amount will be returned by the Issuer to the Lender and the relationship of borrower and lender will get over.
