Public officials in all towns and cities--especially those in smaller communities that participate less frequently in the bond market-- need information to assist them in answering questions concerning bond financing. One in a series developed by the Western Rural Development Center, this booklet introduces three general approaches to financing capital expenditures, discusses the extent of bond use by size of municipality, and reports recent findings on types of bonds used for particular purposes and the factors affecting choice of bond type of towns and cities in Colorado, Montana, Washington, and Wyoming during the period 1967-77. A glossary of specialized bond market terminology is included. (AH)