Types of Bonds

Bonds are financial instruments that represent a form of borrowing. They are issued by various entities, such as governments, corporations, or municipalities, as a means of raising funds for specific projects, operational expenses, or other financial needs.

1. Government Bonds
   • Treasury Bonds (T-Bonds) – Issued by national governments, considered low risk (e.g., U.S. Treasury Bonds).
   • Municipal Bonds (Munis) – Issued by local/state governments, often tax-exempt.
   • Sovereign Bonds – Issued by a country in foreign or local currency.
   
   
2. Corporate Bonds
   • Investment-Grade Bonds – Issued by financially strong corporations with high credit ratings.
   • High-Yield (Junk) Bonds – Higher-risk bonds with higher interest rates to compensate for default risk.
   
   
3. Asset-Backed Bonds
   • Mortgage-Backed Securities (MBS) – Backed by pools of mortgages.
   • Collateralized Bonds – Secured by specific assets.
   
   
4. Special Types of Bonds
   • Convertible Bonds – Can be converted into company stock.
   • Inflation-Linked Bonds – Adjusted for inflation (e.g., TIPS in the U.S.).
   • Zero-Coupon Bonds – Sold at a discount with no interest payments; paid at maturity.
   • Perpetual Bonds – Have no maturity date and pay interest indefinitely.