Debt instruments issued directly by the national government, such as Treasuries, are described as what?

• A. Government Bonds
• B. Government Agency Bonds
• C. Municipal Bonds
• D. Corporate Bonds

Answer: (A)

Debt instruments issued directly by the national government are called government bonds. The key idea is that the issuer is the sovereign itself, so these securities are direct debt obligations of the government. Treasuries are the classic example, issued to fund government operations and deficits. They are typically seen as the safest fixed-income options because they are backed by the government's taxing power and, in many cases, its ability to create currency. They come in various maturities—short-term bills, intermediate notes, and long-term bonds—providing options for different investment horizons while sharing a very low credit risk profile. This distinguishes them from government agency bonds (issued by government-sponsored entities, not the full faith and credit of the government), municipal bonds (issued by states or municipalities), and corporate bonds (issued by companies and subject to corporate credit risk).