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Alli Watkins

Alli Watkins. What are bonds?. Bonds are like loans, where you are the lender and the government or big companies is the borrower. They are NOT INSURED. http:// finance.yahoo.com /education/bond/article/101194/ What_is_a_Bond. What is Interest, Coupon, Face Value, and Maturity Date?.

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Alli Watkins

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  1. Alli Watkins

  2. What are bonds? Bonds are like loans, where you are the lender and the government or big companies is the borrower. They are NOT INSURED. http://finance.yahoo.com/education/bond/article/101194/What_is_a_Bond

  3. What is Interest, Coupon, Face Value, and Maturity Date? • Interest - the money paid for the use of assets. • Coupon - shows the amount of interest due, and when the date payment will be made. • Face Value – the starting amount that is shown on the face of what you’re buying. • Maturity Date – the date that the amount of money you have to pay is due to be repaid. http://www.investinginbonds.com/learnmore.asp?catid=46&id=7

  4. What is the difference between stocks and bonds? A stock is a small piece of a certain company that you own personally. A bond is money loaned to a company for interest. The stock market is more risky than buying a bond because it changes more often. http://beginnersinvest.about.com/od/stocksoptionswarrants/ig/101-Things-To-Know-About-Stock/Stock-vs--Bond.htm

  5. Who invests in bonds? Individual investors and large financial institutions. [pension funds, insurance companies, banks…ect.] http://www.morgankeegan.com/MK/Investing/IProducts/FixedIncome/corporate.htm

  6. How do you buy a bond? Bonds are issued by government corporations. One way to buy a bond is to open an account with a bond broker, but there’s an up front deposit of $5000. If you don’t have an account, you can buy bonds through TreasuryDirect on their website http://www.treasurydirect.gov. Everything is done electronically. http://www.investopedia.com/university/bonds/bonds6.asp

  7. Do bonds mature during a certain time period? Most bonds in the United States take 30 years to reach full maturity. This is when you can cash in the bond and get the entire value of the bond and also the interest you collected. If you cash the bond before it’s mature, you get less money than it took to buy the bond. The bond begins to mature between 17 and 20 years, so you’d get the value of the bond plus a little bit of interest. http://www.onlinestocktrading.org/bonds/when-do-bonds-mature/

  8. What is the relationship between price and yield of a bond? A yield is the yearly income made by a bond divided by the current price of it. The price is the amount paid for the bond. http://personal.fidelity.com/products/fixedincome/howbondswork.shtml

  9. How does the economy affect the price or profit made on a bond? As the economy improves, the demands and profits of bonds will also increase or improve. http://www.oswego.edu/~edunne/340ch6part2.htm

  10. What are the different types of bonds? • Municipal – these are free from Federal tax, but the yield is lower because of this. • Corporate – these have higher yields because they have a higher risk. The higher the credit quality, the lower interest rate you receive. There are other variations of corporate bonds. • Zero-Coupon – makes no coupon payments but instead is issued at a considerable discount to par value. For example, a zero-coupon bond with a $1,000 par value and 10 years to maturity is trading at $600; you'd be paying $600 today for a bond that will be worth $1,000 in 10 years. http://www.investopedia.com/university/bonds/bonds4.asp

  11. Fixed Income Securities They are payments that give you a return in certain amounts of time, eventually you receive all the money at maturity. These do not change like variable income securities, and are known in advance. Fixed income securities  refers to any type of investment that yields a regular return. If you lend money to a borrower and the borrower has to pay interest once a month, you habe been issued a fixed income security. http://www.investopedia.com/terms/f/fixed-incomesecurity.asp

  12. Junk Bonds Junk bonds offer interest rates three to four percentage points higher than safer government issues. They are guaranteed by the government. These are very high risk and aren’t for everyone. A risk of these bonds are that they are more susceptible to prevailing interest rates. http://www.investopedia.com/terms/j/junkbond.asp http://beginnersinvest.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=beginnersinvest&cdn=money&tm=72&f=21&tt=14&bt=1&bts=1&zu=http%3A//invest-faq.com/articles/bonds-zeros.html

  13. How do brokers make their money on bonds? They make their money from the clients they come into contact with and the fees they charge for their services. http://www.investopedia.com/university/bonds/bonds6.asp

  14. Why should you buy bonds? • They are predictable, unlike stocks. You know how much interest you are going to receive, how often you'll receive it, and when the maturity date is. • They provide you with money for the future when you retire.  • The interest rates paid by bonds usually exceed those paid by banks on savings accounts, especially short-term bonds. http://www.rlrouse.com/bonds.html

  15. Diversification and portfolios Diversification is different investments in your portfolio. A portfolio is your entire collection of all these investments. http://www.investopedia.com/terms/d/diversification.asp

  16. Savings Bonds • They are a “registered, non-callable, non-transferable bond issued by the U.S. government and backed by its full faith and credit.” • They differ from other bonds because they are non-marketable, meaning they cant be bought and sold after they are bought from the government. • They are exempt from state and local taxes but federal taxes are applied when the money is accessed. If the money received at redemption is used to pay tuition expenses for the holder, a spouse, or a dependent in the same year, the interest earned doesn’t get federal taxes applied to them. • The face value can be within $50 to $10,000. http://www.investorwords.com/5195/US_Savings_Bond.html

  17. Difference in interest on short term versus long term bonds • If you have long term bonds, the yield is higher than those of short term bonds. http://www.investinginbonds.com/learnmore.asp?catid=3&id=383

  18. Agency Bonds • A bond issed by a U.S government sponsored agency. • They are backed by the government but not guaranteed because the agencies are private. http://www.investorwords.com/152/agency_bond.html

  19. QUIZ • What is a bond? • What is a maturity date? • How long does it take most bonds to mature? • What is the difference between a stock and a bond? • Which type of bond has the highest risk?

  20. ANSWERS • Bonds are like loans, where you are the lender and the government or big companies is the borrower. • Maturity Date – the date that the amount of money you have to pay is due to be repaid. • Most take 30 years. • A stock is a small piece of a certain company that you own personally. A bond is money loaned to a company for interest. • Junk bonds.

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