This is a quote from www.howstuffworks.com
A ferrite bead is simply a hollow bead or cylinder made of ferrite, which is a semi-magnetic substance made from iron oxide (rust) alloyed with other metals. It slips over the cable when the cable is made, or it can be snapped around the cable in two pieces after the cable is made. The bead is encased in plastic -- if you cut the plastic, all that you would find inside is a black metal cylinder.
... Another source of noise is the cables connecting the devices. These cables act as nice, long antennae for the signals they carry. They broadcast the signals quite efficiently. The signals they broadcast can interfere with radios and TVs. The cables can also receive signals and transmit them into the case, where they cause problems. A ferrite bead has the property of eliminating the broadcast signals. Essentially, it "chokes" the RFI transmission at that point on the cable -- this is why you find the beads at the ends of the cables. Instead of traveling down the cable and transmitting, the RFI signals turn into heat in the bead.
