Bond - An investment with which an investor loans money to a company or government for a fixed period of time at a fixed rate of interest.

Some common types of bonds are corporate bonds, municipal bonds, treasury bonds, treasury notes and treasury bills. Bonds are tradable instruments that might be sold at above or below par (amount paid out at maturity).

Bonds are rated by rating services such as Standard & Poor's and Moody's, to specify likelihood of default. Generally speaking, the higher rate of return the bond offers, the more risky the investment.

Most often corporate bonds will offer a higher return than a government bond because there have been instances of companies defaulting on paying back the bond.

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