Question: What Types of Bonds Are There?
Answer: There are many types of bonds. They are:
- Corporate bonds, which are sold by the representative bank.
- Junk bonds or high yield bonds, which are bonds from risky companies, so therefore they offer higher interest rates to compensate for the risk.
- Municipal bonds, which are issued by various cities. These are tax free, but have slightly lower interest rates.
- Savings bonds, which are issued by the Treasury Department and are in low enough amounts to make them affordable for individuals.
- I Bonds, which are like Savings Bonds, except they are adjusted for inflation every six months.
- Treasury bonds, also issued by the Treasury Department. However, the smallest denomination is $10,000...too large for most individual investors.