Bonds are financial securities that allow governments, municipalities, and corporations to raise capital by borrowing from investors. When an entity issues a bond, it promises to pay the bondholder periodic interest payments (known as coupon payments) and to return the bond's face value upon maturity. The primary types of bonds include government bonds, municipal bonds, and corporate bonds, each serving different purposes and having varying levels of risk associated with them. Bonds are considered less risky than stocks, providing predictable income through interest payments.