A bond is just an organization's promise to repay a sum of money at a certain interest rate and over a certain period of time, they also pay a fixed rate of for a fixed period of time.

But why do organizations issue bonds?  Let's say a corporation needs to build a new operation building, or to buy a fleet of vehicles.  Or maybe a city government needs to construct a hospital, repair sewers, or renovate the sewers.  The money generated by the bonds will serve those expenses. 

Corporate bonds are issued by companies of small and large size. Bondholders are not owners of the corporation like the shareholders.  But if the company gets in financial trouble and needs to dissolve, bondholders must be paid off in full before stockholders get anything.  If the corporation defaults on any bond payment, any bondholder can go into bankruptcy court and request the corporation be placed in bankruptcy.

A bond with a maturity of less than two years is generally considered a short-term instrument and also known as a short-term note.  A medium-term note is a bond with a maturity between two and ten years.  And of course, a long-term note would be one with a maturity longer than ten years.

The price of a bond is a function of prevailing interest rates.  When rates go up, the price of the bond goes down because that particular bond becomes less attractive because it pays less interest compared to current offerings.  As rates go down, the price of the bond goes up, because that particular bond becomes more attractive because it pays more interest.  The price also varies in response to the risk perceived for the debt of the organization.  For example, if a company is in bankruptcy, the price of that company's bonds will be low because there is a considerable doubt that the company will ever be able to pay off the bonds at the end of their respective terms.

In the U.S., Bonds are issued by the Treasury Department and other government agencies and are considered to be safer than corporate bonds meaning they pay less interest than similar term corporate bonds.  In the U.S., corporate bonds are generally issued in units of $1,000.