Remember, as bond yields go higher, price goes lower. This relationship between price and yield has a convex structure in nature. The term used to describe this relationship is also known as convexity

Zero Coupon bonds, also known as "zeros", is a unique bond in that the bond holder does not receive coupon payments. Zero coupon bonds are sold at deep discounts to par and then mature at par.

Treasury bonds are the most well known type of bond. They are issued by the United States government and therefore considered without risk. Treasury bonds are issued in $1,000 increments and pay semi-annual coupon payments.

A corporation may issue bonds or equity to fulfill their long term capital needs; however, corporations are also in need of short term funds as well. As an alternative to bank borrowing, corporations may issue commercial paper which is basically short term, unsecured notes in the open market for immediate financing needs.

A callable bond, or redeemable bond, gives the bond issuer the right to purchase the bond back from the bond holder before the maturity date of the bond. Issuers will compensate the bond holder with an option premium to allow themselves the opportunity to purchase the bond back if they are paying the bond holder a higher coupon than the market bears.