🏦 Bonds & The Fed · Lesson 1 of 7 · 9 min
Bonds — Loans That Pay You
💼 In 2008, while the stock market crashed 37%, US Treasury holders did something boring and unusual: they kept getting paid — twice a year, like clockwork — and their bonds actually went UP. Bonds are the financial equivalent of a person who never gets excited and somehow always has money.
💡 Key idea
Bonds = loans. Lower risk + lower returns than stocks.
🧠 Why it matters
You lend money. They pay interest (coupon). Return principal at maturity. US Treasuries = no default risk (but prices still swing — see lesson 3).
🌍 In the real world
🇺🇸 2008 financial crisis: stocks fell 37% in a single year (57% peak to trough), while US Treasuries ROSE. The ultimate safe haven.
📌 Takeaways
- Lend money, earn interest
- Treasuries = safest
- Lower risk + lower returns
📖 Terms in this lesson
Bond: A loan you make to a government or company; they pay you interest and return the money at the end.
Yield: What an investment pays each year as a percentage of its price.
✅ Test yourself
Safest bonds globally?
- Corporate junk
- US Treasuries
- Foreign bonds
- Crypto
Answer: B · US Treasuries
US Treasuries are backed by the full faith and credit of the US government — the global benchmark for safety.
What IS a bond, simply put?
- A share of a company
- A loan you give that pays you interest
- A type of crypto
- A savings account
Answer: B · A loan you give that pays you interest
A bond is a loan. You lend money to a government or company, and they pay you interest, then return your principal.
Bonds vs stocks — bonds are generally...
- Riskier, higher return
- Safer, steadier, lower return
- Always better
- The same thing
Answer: B · Safer, steadier, lower return
Bonds are typically safer and steadier than stocks, but offer lower long-term returns. They balance a portfolio.
Quiz, XP and streaks in the app. No sign-up needed.