There are many kinds of bonds but with distinctive purposes and risk profiles. As such, there are:
1.:
2.: These are issued by local or state government and raised funds for public projects such as schools, highways, and hospitals. In most cases, these bonds offer tax-free interest income for investors, especially in the U.S. These also come under two types – general obligation bonds, which are guaranteed by the taxing power of the issuer, and revenue bonds, guaranteed by certain revenues like tolls or taxes.