A bond is a debt instrument in which an investor loans money to an entity (typically corporate or government) that borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are issued by companies (corporates), municipalities, states, and sovereign governments to raise money to finance a variety of projects and activities. Owners of bonds are debt holders, or creditors, of the issuer.

The accrued interest on a bond is the amount of interest accumulated on a bond since the last coupon payment.

Coupon payments are made at regular intervals throughout the life of a debt security and may be quarterly, semi-annual (twice a year) or annual payments.

Face value is the amount that is to be paid to an investor at the maturity date of the security. In India the typical face value is ₹100. The face value is also known as the repayment amount. This amount is also referred as redemption value, principal value (or simply principal), maturity value or par value.

The date when the principal (face value) is paid back. The final coupon and the face value of a debt security is repaid to the investor on the maturity date. The time to maturity can vary from short term (1 year) to long term (40 years).

The remaining period until maturity date of a security is its residual maturity. For example, a security issued for an original term to maturity of 10 years, after 2 years, will have a residual maturity of 8 years.

The annual percentage rate of return earned on a security. Yield is a function of a security’s purchase price and coupon interest rate. Yield fluctuates according to numerous factors including global markets, the economy, rating and performance of the issuer.

Yield to maturity is the total return one would expect to receive if the security is being held until maturity. Yield to maturity is essentially the discount rate at which the present value of future payments (investment income and return of principal) equals the price of the security.

Maturity - Maturity is important because this determines the extent of risk an investor is exposed to – normally higher the maturity, higher the interest rate risk or market risk.
Coupon – A coupon is the rate of interest paid on debt security i.e. Bond is calculated on the basis of the security’s face value.
The coupon rate of the bond is equally important for the investor as it affects the total return from the bond. In order to determine which bond to buy, the investor must look at the Yield to Maturity (YTM) of a bond.
Thus, once the maturity and yield (YTM) is decided, one may select a bond.