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Types of Bonds

Issuers of bonds include federal and local governments, government agencies, and corporations.

Treasury Securities: A bond issued by a national Government. Generally considered safe investments because the taxing authority of the government backs them. In the U.S., Treasury securities are not subject to state income tax. The following are three types of treasury securities.

  • Bonds: Treasury bonds mature in more than 10 years.
  • Notes: Treasury notes mature from one to 10 years.
  • Bills: Treasury bills mature in less than one year.

Corporate Bonds: A bond issued by a corporation, usually through the public securities markets, which trades like stocks. Corporate bonds offer a higher yield than Treasury Securities since they carry a higher default risk.

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