Bonds are financial instruments used by governments and corporations to raise money. The main types include government bonds, which are issued by national governments and considered low-risk, and corporate bonds, issued by companies that may offer higher returns but come with increased risk. Another type is municipal bonds, issued by local governments to fund public projects, often providing tax benefits. Additionally, there are convertible bonds, which can be converted into a predetermined number of shares of the issuing company, and zero-coupon bonds, sold at a discount and paying no interest until maturity.