Because they pay no coupon, zeros can be highly volatile in price. Like zeros, inflation bonds are best held in tax-deferred accounts. Interest is taxable and is paid monthly, along with a partial repayment of principal. Except for Ginnie Maes, these bonds are not backed by the full faith and credit of the U.S. government. They generally yield up to 1 percent more than Treasuries of comparable maturities.
Corporate bonds pay taxable interest.
Because their value depends on the creditworthiness of the company offering them, corporates carry higher risks and, therefore, higher yields than super-safe Treasuries. Junk bonds typically pay higher yields than other corporates. Interest is exempt from federal taxes and, if you live in the state issuing the bond, state and possibly local taxes as well. Note, though, that Illinois, Kansas, Iowa, Oklahoma, and Wisconsin tax interest on their own muni bonds. Munis generally offer lower yields than taxable bonds of similar duration and quality.