What are bonds 
A bond is a debt security that is issued by a government, municipality, or corporation. When an investor buys a bond, they are essentially lending money to the issuer in exchange for regular interest payments, called coupon payments, and the return of the principal amount at maturity.
Bonds & it's classification : Bonds can be classified into several categories based on the type of issuer, the length of time until maturity, and the creditworthiness of the issuer. Some common types of bonds include:
Government bonds: Bonds issued by the federal government or by a state or local government. These are considered to be among the safest investments, but also offer lower returns than other types of bonds.
Corporate bonds: Bonds issued by private companies. These can offer higher returns than government bonds, but they also carry more risk, as there is a greater chance that a company will default on its debt.
Municipal bonds: Bonds issued by cities, counties, and other local government entities. These are tax-exempt, which means that the interest earned on these bonds is not subject to federal income taxes.
Treasury bonds: Bonds issued by the US Treasury. These are considered to be the safest of all bonds, because they are backed by the full faith and credit of the US government.
High-yield bonds: Also known as "junk bonds", these are bonds issued by companies or municipalities with lower credit ratings. They offer higher returns than other types of bonds, but they also carry a higher risk of default.
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Summary in simple words : - To explain this you need to understand that everybody needs money. You need funds to purchase fullfill your needs and wants, Companies need to fullfill their working Capital requirements, Long term goals and many other reasons, also a Govt needs funds too, why ? to fullfill their Fiscal Deficit to control money Supply and other reasons. Hence to raise funds they especially firms can raise through banks or sale of Equity and also by issuing Bonds or Debentures, Now Bonds and a type of Financial Instruments or security under which issuer (Borrower/Debtor) owes the holder (Lender/Creditor) a debt, and is obliged - depending on the terms. In such case a bond is issued with a Face Value (Value writen on the face of the Bond) Coupon rate (Interest which the issuer shall be paying on such bond) Maturity (Time frame) on when the bond shall mature and also pre-defined number of payment (Eg. Annually, Semi-annually, Quaterly etc.)
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