Because the interest rate the investor receives is set when the bonds are issued, they are known as fixed-income securities. Unlike stockholders, bondholders have no ownership interest in the issuing corporation or voice in management. As creditors, bondholders receive preferential treatment over common and preferred stockholders if a corporation files for bankruptcy. Because creditor claims are settled before the claims of stockholders, bonds are considered senior securities. Therefore, stockholders' interests are subordinate to those of bondholders.
Municipal bonds are the debt obligations of state and local governments and their agencies.
Most are issued to raise capital to finance public works or construction projects that benefit the general public. Purchases of non-deposit products involve investment risks including the possible loss of principal amount invested.