Bonds are a form of debt security, where the issuer owes the holder a debt and must repay the loan, including the principal and the interest, at a later date, which is called maturity. Bonds are usually issued for a fixed term, till the maturity date, and for a period of over ten years. Bonds are types of loans, but are in the form of securities. The terminology is also different, the borrower becomes the issuer and the lender becomes the bond holder. (The interest is also called coupon) Other special stipulations might be attached to the bond, such as the issuer being required to provide information to the bond holder or other limitations on the issuer's behavior. Usually, security issued debt over ten years qualifies as a bond, while new debt between 1 and ten years is a note, and new debt less than one year is a bill. (Though sometimes the terms bond and note are used regardless of the maturity.

Unlike stocks, which are also a securities, bond holders do not own stock in the investment, rather they are lenders to the issuer. Bonds have a definite term and maturity period, in which the bond can be redeemed, unlike stocks which go on indefinitely until the stockholder buys out or goes bankrupt.

Issuers Of Bonds
Bonds can be issued by many types of organizations, though legality often plays a major part. Regulations for bonds can be very strict. Bonds can be issued by national or international agencies, agencies, local state or municipal authorities, government sponsored organizations, corporations, special purpose vehicle companies, credit institutions, privately owned commercial companies and other institutions. Government bonds are usually auctioned off, while the most common bonds are available through underwriting. With underwriting, one or more banks or other security firms form a syndicate and buy bonds from issuers, so they can resell them to investors.

There are many types of bonds that entail different financial obligations, such as fixed rate bonds, floating rate notes, high yield bonds, zero coupon (interest) bonds, inflation linked bonds, asset-backed securities, subordinated bonds, perpetual bonds (with no maturity date) bearer bonds, registered bonds, municipal bonds, book-entry bonds and lottery bonds.

Most bonds are bought and traded by institutions, though about 10% of all outstanding bonds are held by individual households. Interestingly, bond markets rise when the stock markets fall and are generally considered to be safer investments when compared to stocks. Bonds also have legal protection against company bankruptcy, unlike stocks where can end up having no value. Where can you find cheap bonds? Zions Bank and ScotTrade offer to get you started in bond investments.