Bonds represent a loan made to the issuer of the bond. Bonds can be taxable or tax-exempt and are issued by a corporation, the United States government, a United States government agency or municipality.

Typically, bonds pay a fixed rate of interest at regular intervals and have a definite maturity date. Once a bond matures, unless the bond is redeemed prior to maturity by the issuer, the investor is typically paid the face value of the bond.