Groups of similar investment types are called asset classes. Bonds are one of the main asset classes, and they are typically present in most investors’ portfolios to provide some fixed income. Since bonds provide a stable return, they can offset some of the risk from stock investments. What are Bonds? When institutions like the government or a corporation would like to raise an amount of money, they borrow money by issuing bonds. These bonds can be bought by investors, and the price of the bond is loaned to the institution. In this way, bonds are like an IOU: the borrowing company acknowledges the amount that has been given to them by the investor, and promises repayment with interest. The interest is generated at regular intervals, depending on the details of the bond, and the principal is paid in full at the end. It is also possible to sell bonds...