Bonds, just like Stocks are a type of security and a good instrument for investment. The main difference between Stocks and Bonds are, Stocks gives the holders an equal stake in the company proportionate to their holding and Bond holders are mere creditors to the company and do not hold any stake in the company.
The issueers of Bonds or the borrowers, usually big Public Listed companies or corporates generally issue bonds to fund their long-term finance needs. Most of the Governments or the Government agencies also issue bonds to fund big infrastructure projects or any other immediate needs.
Bonds are considered as a relatively safer investments as Interest, also known as Coupon to the lender or the purchaser of the bond. In the case of most of the government issued bonds, the interest rates are attractive, and the interest income is also tax-free in most of the cases.
Bonds can be considered as fixed income instruments which repay regular interest to the lender and the principal invested is also repayable at the end of the tenure or the maturity. The interest rates are lot more attractive than Fixed Deposits. But the main difference between FDs and bonds are the Maturity period. Bonds generally have a longer maturity period, and the lender will not be able to pre-close.
In case of corporate bonds, bonds can be purchased by simply filling an application form at any of the issuing branch of the company and in case of government bonds; bonds can be purchased at any of the designated banks or postoffices.