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What is the difference between government bonds and corporate bonds?

From a tax standpoint, government bonds offer exemption from state and local taxes, while corporate bond income is taxed at ordinary rates. Investors must weigh these trade-offs between corporate bonds vs government bonds based on their risk tolerance, return objectives, time horizon, and tax considerations.

What is a corporate bond?

A corporate bond is a bond issued by a company, often a publicly traded company. It stands in distinction to bonds issued by other organizations, such as Treasury bonds issued by the U.S. federal government and municipal bonds issued by state and local governments.

Are corporate and government bonds a good investment?

While both offer regular interest payments and return of principal at maturity, corporate and government bonds have unique risk-return characteristics that investors should assess.

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