Today's commodity market has its roots in the trading of agricultural products. Since ancient times people have assigned economic values to items such as sheep, goats, and wheat. The modern commodity market is much more standardized with specific delivery dates, commodity sizes, and precise commodity descriptions. A lot of the time commodity trading is mentioned synonymously with futures trading, however there are slight differences. Commodities refer to the underlying goods such as gold, crude oil, wheat, etc..., and can be traded between two parties. Futures, however, are standardized contracts among buyers and sellers of commodities that specify the amount of a commodity, grade / quality and delivery location. Commodity futures trade on an exchange such as the Chicago Mercantile Exchange (CME) or Chicago Board of Trade (CBOT).

You can think of a simple bond as an IOU, where you as the bondholder are lending the issuer money and they intend to pay you interest and will pay you back in full at a predetermined time. The interest comes in the form of coupon payments, which are made at a prespecified frequency (usually semi-annual). The time at which you receive your principal is called the maturity date of the bond. For example, lets say you bought a bond from me that paid 5% coupons, semiannually, with a maturity date of 2 years. If you paid $1,000 for this bond, the cashflows would look like the following: $25, $25, $25, $1,025. Every 6 months you would receive $25 as the coupon, and on the final maturity date, you would receive the $25 coupon + the face value of the bond of $1,000. Of course, your receipt of these cashflows is dependent on my ability to pay you at each point in time. Thus, the cashflows are characterized as being "risky" and if I failed to pay coupon or principal, it would be considered an event of default. As a result, you as an investor will want to receive a larger coupon if you deem me to be more risky, and vice versa.