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What are some different types of bonds?

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Quick Answer

Some different types of bonds include U.S. Treasury bills, savings bonds and municipal bonds, according to About.com. Other bonds are the junk bonds, high-yield bonds and government bonds.

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Full Answer

The Treasury Department issues bonds, along with bills and notes, says About.com. These types of bonds are what the rates for other fixed-rate bonds are based on. The Treasury Department also issues savings bonds, though they are actually purchased by private investors. These are available in low amounts, making it possible for individuals to afford them. Other federal government bonds are issued by Freddie Mac and Fannie Mae, often called quasi-government agencies.

Municipal bonds are issued locally, by different cities, notes About.com. These bonds have lower interest rates than corporate bonds, though they have the benefit of being tax-free. They are also a little riskier than government-issued bonds. Many different types of companies issue corporate bonds, which have a higher rate of return. Corporate bonds with higher interest rates are high-yield or junk bonds.

Preferred stock can also be considered a bond, since it gives out dividends at regular intervals, similar to how bond payments work, according to About.com. It is also less risky than purchasing a stock. A bond issued by a bank is a Certificate of Deposit, or CD. While not an actual bond, it works similar to one, just like the preferred stock.

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