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A loan to a government or a company. The bond pays interest on a set schedule and pays the loan back on a set date. A bond fund holds many bonds and trades like a stock. When interest rates rise, the prices of bonds that already exist usually fall, and when rates fall, they usually rise.
Example:
You lend a company $1,000 for 5 years at 5% a year. It pays you $50 each year, then pays back the $1,000.