Final answer:
A bond is a financial instrument featuring a face value, which is the amount paid to the holder at maturity, and a coupon rate, the regular interest payments made to the holder. Maturity date and market conditions also influence bond characteristics.
Step-by-step explanation:
In the world of finance, a bond represents a debt investment in which an investor loans money to an entity that borrows the funds for a defined period of time at a fixed interest rate. When discussing the features of a bond, two of the most important components are the face value and the coupon rate.
The face value of a bond is essentially the principal amount of the bond or the amount of money that the borrower must repay to the bondholder at the bond's maturity date. The coupon rate, on the other hand, represents the yield the bond pays on its issue date or the interest rate paid by the bond issuer to the bondholder, commonly disbursed semi-annually.
Other features of a bond include the bond's maturity date, which is the date on which the borrower will settle its debt and pay the face value to the bondholder, and the present value of the bond, which is the value a buyer is currently willing to pay for the bond, influenced by factors such as market interest rates.