Following
are some of the main classes of bonds:
1) Corporate Bonds: These are issued by large corporations and have higher yields because there is a higher risk of a company defaulting as compared to government bonds.2) Government Bonds: These are the bonds issued by government in its own currency. They are usually referred to as risk-free bonds. Bonds issued by national governments in foreign currencies are referred to as sovereign bonds.3) Zero-Coupon Bonds: This is a type of bond that does not pay interest and sold at a lower than par value. For example, a zero-coupon bond with a $10,000 par value and 20 years to maturity is trading at $2,000; you will be paying $2,000 today for a bond that will be worth $10,000 in 20 years.4) Junk Bonds: Also known as a "high-yield bonds", they are rated lower because of high default risk.5) Convertible Bond: This gives the holder the right to convert it into common shares of the issuer at some fixed ratio in a particular date. They have a coupon payment.6) Inflation-indexed (or inflation-linked) Bond: It provides protection against inflation, and is designed to cut out the inflation risk of an investment.7) Foreign Currency Bond: This is issued by an issuer in a currency other than its national currency.8) Extendible and Retractable Bonds: They have more than one maturity date. Extendable bonds allow the holder to extend its initial maturity at a specific date or dates.
1) Corporate Bonds: These are issued by large corporations and have higher yields because there is a higher risk of a company defaulting as compared to government bonds.2) Government Bonds: These are the bonds issued by government in its own currency. They are usually referred to as risk-free bonds. Bonds issued by national governments in foreign currencies are referred to as sovereign bonds.3) Zero-Coupon Bonds: This is a type of bond that does not pay interest and sold at a lower than par value. For example, a zero-coupon bond with a $10,000 par value and 20 years to maturity is trading at $2,000; you will be paying $2,000 today for a bond that will be worth $10,000 in 20 years.4) Junk Bonds: Also known as a "high-yield bonds", they are rated lower because of high default risk.5) Convertible Bond: This gives the holder the right to convert it into common shares of the issuer at some fixed ratio in a particular date. They have a coupon payment.6) Inflation-indexed (or inflation-linked) Bond: It provides protection against inflation, and is designed to cut out the inflation risk of an investment.7) Foreign Currency Bond: This is issued by an issuer in a currency other than its national currency.8) Extendible and Retractable Bonds: They have more than one maturity date. Extendable bonds allow the holder to extend its initial maturity at a specific date or dates.
