Question

Compare between the following types of bonds?                                  
A. Corporate bonds:


B. Municipal bonds:



C. Foreign bonds:

Answer 1

The difference between municipal, corporate and foreign bonds are as follows-

1. Municipal bonds are issued by localities to fund projects like roadways while corporate bonds are issued by large corporate houses while foreign bonds are issued by foreign companies and other countries government

2 The risk associated with corporate bonds are highest among all three and lowest risk is associated with municipal bonds as they are backed by respective States. Foreign bonds can be highly risky if invested into foreign companies but can be safe bet when invested into other Federal Government bonds.

3. The yield offered by corporate bonds will be highest while the yield offered by municipal bonds will be lowest. If invested into the foreign companies,bond yield would be impacted by currency risks and can be a bit lower if invested into other countries Federal bonds.

4. Credit rating of municipal bonds would be highest while credit rating of foreign companies bond would be lowest.credit rating of corporate bonds are always lower in comparison to credit rating of state bonds.