In essence, a bond is an IOU from the government or company to the person who purchases the bond, known as a bondholder. You purchase bonds by means of getting a predetermined amount of money to the government or company, and in return the government or company agrees to pay the amount of the bond, plus interest at a certain point in the future determined by the parameters of the bond. The maturity time for bond can be anywhere from one to 30 years, depending on the type.