Bonds remain one of the key sources of revenue for the running of the diverse government operations without having to result to increase taxing. There are several types of bonds which are issued to the public for their decisions as to participate in the purchase and the likes. Some of the key types of bonds include treasury bonds, foreign bonds, and mortgages high-yield bonds among others. All these bonds vary in their operations, taxation and the complications of their operation. This paper focuses on the comparison between treasury bonds and government bonds regarding their return on investments; taxation as well as risks associated with either.
The treasury bonds are majorly issued by the relevant federal states to finance their budget deficits. The treasury bonds are designed to mature within a period not more than ten years. They are run according to the tax regulations making them risk-free. The treasury bonds are known to have relatively low yields. The interests accrued from the treasury bonds are cushioned against the state income taxes making them a preferred investment, especially for the small-scale buyers.
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The government bonds, on the other hand, vary in nature and are issued highly by the federal agencies. There are several other measures of the government bonds, but by all measures, the government bonds are known to have higher earning in comparison to the treasury bonds. The return on investment for the government bond is relatively higher compared to the treasury bonds due to the degree of funds used in securing them. The government bonds also have higher risks since the interest earned from them attracts taxation from the state. The taxation on the government bonds takes place at both the federal level and t the national level. The purchasing of the government bonds attracts majorly the corporate players due to the massiveness o the returns that they are associated with as well as the higher interest that they accrue.
