They differ from each other in their maturities, in the frequency with which they are offered, in the interest rates they pay, and the way in which the interest is paid. But they share the reputation of being absolutely safe. Newly issued bonds and those trading in the secondary market are available from stockbrokers and from some banks. The words that describe bonds have very specific meanings. Like the word security, which once meant the written record of an investment, the word bond once referred to the piece of paper that described the details of a loan transaction.
Bonds are loans that investors make to corporations and governments.
The lenders earn interest, and borrowers get the cash they need. Municipal bonds are debt obligations issued by states, cities, counties, and other governmental entities to raise money to build schools, highways, hospitals, and sewer systems, as well as many other projects for the public good. You don't have to share your earnings with the IRS or state taxing authorities. Rating services measure those risks. As a bond investor, you want to be reasonably sure that you'll get your interest payments on time and your principal back at maturity.