Bonds are simply IOUs issued by firms and governments.
Issuing bonds is a method of borrowing money to finance economic activity. Most bonds pay a fixed return per year until the bond matures, at which time the owner is entitled to receive payment of the face value of the bond. The fixed return is expressed as a percent of the face value. The U.S. Coupon Bond shown here is a typical government bond. Even though most bonds are issued over the long term.