Another type of bond is a convertible bond . This security can be converted into shares of the company that issues the bond if the bondholder chooses. Of course, the conversion price is usually chosen so as to make the conversion interesting only if the stock has a pretty good rise. There are many terms that you need to understand to talk about convertible bonds. Just one more - the conversion ratio specifies how many shares the bond can be converted into.
Many individuals buy bonds.
Banks buy bonds. Money market funds often need short term cash equivalents, so they buy bonds expiring in a short time. People who are very adverse to risk might buy US Treasuries, as they are the standard for safeness. Foreign governments whose own economy is very shaky often buy Treasuries. See the FAQ article on bond ratings for more information.