Which are common types of bonds that are currently issued? (Check all that apply.)
The common types of bonds currently issued are corporate bonds, municipal bonds, and Treasury (U.S. government) securities such as bills, notes, and bonds. "Equity bonds" is not a real instrument, and "war bonds" are no longer issued, so both are incorrect distractors.
The answer
On a "check all that apply" question about bond types currently issued, the correct selections are corporate bonds, municipal bonds, and Treasury (government) securities. These three categories are grouped by who issues (borrows) the money, and all three are actively sold in today's market.
- Treasury securities are issued by the U.S. federal government (bills, notes, and bonds). They are considered the safest because they are backed by the full faith and credit of the government, and their interest is exempt from state and local income tax.
- Municipal bonds ("munis") are issued by states, cities, counties, and other local authorities to fund public projects like schools, roads, and water systems. Their standout feature is that interest is usually exempt from federal income tax, and often from state tax for in-state residents.
- Corporate bonds are issued by companies to raise capital. They carry higher risk than government debt (a company can default), so they pay higher interest, and that interest is fully taxable.
Why the other options are wrong
The two trick distractors on this question are usually "equity bonds" and "war bonds."
"Equity bond" is not a real security. The term mixes two opposite ideas. Equity means ownership (stock), while a bond is debt (a loan you make to the issuer). A single instrument cannot be both a straight ownership share and a fixed-income loan, so "equity bond" does not exist as a standard issued bond type. (Convertible bonds do exist, but those are corporate bonds with a stock-conversion feature, not a category called "equity bonds.")
War bonds are no longer issued. War bonds were special government savings bonds sold during World War I and World War II to help fund the war effort and appeal to citizens' patriotism. The U.S. government stopped issuing war bonds after those eras. While ordinary U.S. Savings Bonds still exist, the specific "war bond" is a historical product, not a currently issued type, so it should not be checked.
The bigger picture
Bonds are simply loans, and every bond is defined by its issuer, its risk, and its tax treatment. Sorting the options by issuer is the fastest way to answer these questions: if a real entity (a government, a city, or a company) currently borrows money that way, it is a valid current bond type. If the label describes ownership (equity) or a discontinued historical program (war bonds), rule it out. Understanding the risk-and-tax trade-offs also explains why investors hold a mix: Treasuries for safety, munis for tax-free income, and corporates for higher yield.
| Treasury (bills/notes/bonds) | U.S. federal government | Lowest | Federal taxable; state/local exempt | Yes |
| Municipal bond | State/local governments | Low to moderate | Often federal tax-exempt | Yes |
| Corporate bond | Companies | Moderate to high | Fully taxable | Yes |
| Equity bond | (not a real instrument) | N/A | N/A | No |
| War bond | Historical U.S. government | N/A | N/A | No (discontinued) |
Frequently asked
What are the main types of bonds?
The three main categories, grouped by issuer, are Treasury (government) bonds, municipal bonds issued by states and localities, and corporate bonds issued by companies. Agency and international bonds also exist, but these three are the core types actively issued in the U.S.
What is the difference between corporate and municipal bonds?
Corporate bonds are issued by companies, carry higher default risk, pay higher interest, and that interest is fully taxable. Municipal bonds are issued by state and local governments to fund public projects, carry lower risk, and their interest is usually exempt from federal income tax.
Are war bonds still issued?
No. War bonds were government savings bonds sold during World War I and World War II to fund the war effort. The U.S. stopped issuing them after those eras. Regular U.S. Savings Bonds still exist, but the specific war bond is a historical product.
What is an equity bond and does it exist?
There is no standard security called an equity bond. Equity means ownership (stock) and a bond is debt (a loan), so the term contradicts itself. It is a common trick distractor. Convertible corporate bonds exist, but they are bonds with a stock-conversion option, not equity bonds.