A tradable loan – the issuer pays regular interest and returns the face value at maturity.
Buying a bond means lending money to a government, company or bank. In return you receive a fixed coupon and your principal back at maturity. Bonds are quoted as a percentage of face value and can be sold before they mature.
The two big risks are interest rate risk – when market rates rise, prices fall, measured by duration – and default risk, summarised by the credit rating.