Bonds are securities that pay the investors interests periodically. A bondholder is only a lender to the entity that issues the bond while a shareholder is one of the owners of the company. The bondholder, apart from interest received periodically, will be paid the original amount invested (the principal) at the end of the term (maturity). Bonds can be issued by the government or corporate organisations. 

Bonds give the issuer the opportunity to raise funds for developmental or expansion purposes. Many bonds are traded on the stock exchange.