ABSTRACT
When you buy a bond, you are in effect lending your money to the issuer of the bond. The issuer agrees to make periodic interest payments to you, the investor holding the bond, and also agrees to repay the original sum (the principal) in full to you on a certain date — known as the bond’s maturity date. Interest rates can soar and you, the customer, will still be repaid the entire principal at maturity. Even a mutual fund with a stable NAV will be affected to some extent by changes in interest rates.
