Definition
The bond market is a place where investors buy and sell bonds, which are basically loans given to governments or companies. When you invest in a bond, you are lending money and earning interest in return.
Example
For example, if you buy a government bond worth 10,000 with an interest rate of 7%, you will earn 700 per year as interest. You can also sell this bond in the bond market before it matures.
Caution
Although bonds are generally considered safer than stocks, they still carry risks. Interest rate changes and the issuer’s ability to repay can affect the bond’s value and returns.