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A bond is like a tradable loan. Imagine I lend you $100. In return, you agree to pay me $5 (a.k.a. 5%) each year in “interest” until 5 years have passed, at which point you pay me back the $100 that I lent you. Except, I sell your loan to someone else, so that you pay them $5 each year and pay them the $100 back after 5 years.

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