Bond Basics: Conclusion
Now you know the basics of bonds. Not too complicated, is it? Here is a recap of what we discussed:
- Bonds are just like IOUs. Buying a bond means you are lending out your money.
- Bonds are also called fixed-income securities because the cash flow from them is fixed.
- Stocks are equity; bonds are debt.
- The key reason to purchase bonds is to diversify your portfolio.
- The issuers of bonds are governments and corporations.
- A bond is characterized by its face value, coupon rate, maturity and issuer.
- Yield is the rate of return you get on a bond.
- When price goes up, yield goes down, and vice versa.
- When interest rates rise, the price of bonds in the market falls, and vice versa.
- Bills, notes and bonds are all fixed-income securities classified by maturity.
- Government bonds are the safest bonds, followed by municipal bonds, and then corporate bonds.
- Bonds are not risk free. It's always possible - especially in the case of corporate bonds - for the borrower to default on the debt payments.
- High-risk/high-yield bonds are known as junk bonds.
- You can purchase most bonds through a brokerage or bank. If you are a
citizen, you can buy government bonds through TreasuryDirect. U.S.
- Often, brokers will not charge a commission to buy bonds but will mark up the price instead.
A short- to medium-term debt instrument that offers a potentially ...
A Next Generation Fixed Income (NGFI) manager is a fixed income ...
Next generation fixed income is an innovative approach to investing ...
Several classes of noninvestment grade bonds held by an insurance ...
A limited-time offer of a higher rate of return on a certificate ...
Discover the relationship between a bond’s current yield and risk, and how investors can use it to benefit their overall ...
Find out more about financial spread betting, arbitrage and the differences between financial spread betting and the arbitrage ...
Read a brief overview of how to open a brokerage account, how to buy and sell stock, and the different kinds of trade orders ...
Find out more about the turnover ratio, what the turnover ratio measures and what a high turnover ratio indicates about an ...