What are government bonds?

A government bond is a form of security sold by the government. It is called a fixed income security because it earns a fixed amount of interest every year for the duration of the bond. The purpose of a government bond is to raise money to operate the government and to pay down debt.

Government bonds are considered to be secure. That is, it is very unlikely that the government will default. Bonds have maturity dates that may vary from one month to 30 years.