Which of the following entities can issue bonds?

Bonds can be issued by a variety of entities, including both corporations and governments. This makes the choice of corporations and governments the correct answer.

Corporations issue bonds to raise funds for various purposes, such as expanding operations, investing in new projects, or refinancing existing debt. These corporate bonds allow investors to lend money to the corporation in exchange for periodic interest payments and the return of the bond’s face value at maturity.

Similarly, government entities, which include federal, state, and local governments, issue bonds to finance public projects such as infrastructure, schools, and hospitals, or to manage budget deficits. These government bonds typically have lower risk compared to corporate bonds due to the stability and backing of tax revenues.

The other options reflect a limited view of who can issue bonds. The assertion that only federal governments, only corporations, or only state governments can issue bonds excludes the broader range of corporate and governmental entities that participate in the bond market. This understanding is essential for recognizing the diverse sources and types of capital available to investors in the financial markets.