When you link a word or words, your site visitors who click on that text will go to the destination you specify. You can create a link to:
To link text:
First pick a word on your page and select it: Double-click (click your mouse twice) inside the text box surrounding the word. The box border will change into a thick solid line surrounded by a dotted line.

Now click your mouse and drag it over the word you'd like to link.

Click the Link to... button on your toolbar.

This will open the Link dialog, which you'll use to set up your link.
In the first menu of the Link dialog, choose the type of destination for your link (another page, web site, email address, file, or other). For this example, let's select Another Web Site.

In the second step, enter the actual destination of your link. The destination depends on your choice in step 1.
For this example, we want to link to the web address of another site. Let's link your word to the Yahoo! web site, at www.yahoo.com.

In the third step you can decide how you want the link to behave: When the user clicks the link, the other web site (in this case, the Yahoo! home page) can open in the same browser window or a new one. Let's open the link in the same window: Choose The same browser window.

Finally, in step 4, you'll see the text you chose to link. You can click the image now to test your link in a web browser, and change this text by modifying the words that appear in this field with your keyboard. For this example, we'll change the word to Yahoo!
When you're ready to activate your link, click Create. (Go ahead and create the link now — you can always edit or remove it later!)

Note: You can also create a text link without first creating text. Right-click on the page where you would like to insert your link. In the menu that appears, choose Insert, then Link to..., then the type of link you want to create. Choose your link destination and behavior, then enter the text you want linked in the Enter text for link: field.