Business and Personal Finance Dictionary

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• SAVINGS BOND
  
  The US government issues three types of savings bonds: Series EE, Series HH and Series I. The interest they pay is free from state and local tax, and they are all considered risk-free since they're backed by the federal government. Series EE bonds, which you buy for a percentage of their face value and typically hold at least until they reach full value at maturity, are probably the best known. Series I bonds are sold at face value and are indexed for inflation, which means the interest you earn fluctuates with changes in the Consumer Price Index (CPI). Series HH bonds are also sold at face value and pay regular interest, but you can't pay cash for them. You must exchange Series EE bonds to buy them. The biggest difference between savings bonds and US Treasury bills, notes, and bonds is that there is no secondary market for savings bonds since they can not be traded among investors. You buy them in your own name or as a gift for someone else and redeem them by turning them back to the government, usually through a bank or other financial intermediary.
  
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