Proof or evidence of debt issued by a company, organization or government. When a company wants to borrow money on long term basis (or wish to increase its financial leverage) the issuance of bonds is considered as best way to do that. Bondholders get predetermined interest on bond called coupon for the life of bond and at the maturity of bond issuing company repay the principal to bondholder

Bonds vs. shares 
Main differences:
  • Bondholders are the lender or creditor of a company while shareholders are true owner of a company 
  • Bondholder can't vote for directors’ election while shareholders can 
  • Bonds represents the debts of a company, share represent the capital or equity of a company 
  • The life of bonds is finite while the life of shares is infinite 

Types of Bonds
  • Government Bonds
  • Zero Coupon Bonds
  • Floating-Rate Bonds
  • Other Bonds