A bond is a loan you give to a government or company. In return, they pay you interest (a coupon) on a set schedule and repay the original amount (the face value) when the bond matures. Here's a simple breakdown: 1) You buy the bond and lend money now. 2) You receive periodic interest payments (coupons). 3) At the end of the term, you get your original investment back (the face value). 4) Bond prices can move with interest rates: when rates rise, prices often fall; when rates fall, prices rise, which can affect your return if you sell before maturity. Example: Face value $1,000, coupon rate 5% per year, maturity 3 years. You'd get $50 per year in coupons (total $150 over 3 years) and $1,000 back at the end. If you buy at par ($1,000), your yield to maturity is about 5% assuming rates stay the same; if you pay a different price, the yield changes accordingly.

Bond yield is the expected overall return from a bond if you hold it until it matures. It includes the coupon payments you receive and any gain or loss from paying a price different from the bond's face value. Yield measures the true, time-based return rather than just the coupon rate.