More in the Glossary:

US Treasury Bonds - 10 years or more.  Taxed federally but not state or locally
US Treasury Notes - between 1 and 10 years.  Taxed federally but not state or locally
US Treasury Bills - 1, 3, 6, or 9 months.  Taxed federally but not state or locally

Municipal bonds - State and local government – no fed tax – no state tax if resident

Corporate bonds - Obligations to corp.
Investment grade - high quality credit
Junk bonds - low quality credit

Interest rate risk- Increase in interest rates will cause a decrease in bond prices.  Decrease in interest rates = increase in bond prices

Duration - the weighted average life of a bond

Bond indenture – major bond provisions

Serial payments- bonds are paid off in installments over life of the issue

Sinking funds – Corp. makes contributions for a fund to buy back bonds out of market

Call provision – usually deferred for 5 years and usually corporation pays a 5 – 10% premium

Put provision – if interest rates go up, investor can sell back bond at par value after 3 – 5 years