|
Bond
What does it mean?
A debt investment, with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate.
In Other Words...
The indebted entity issues investors a certificate, or bond, that states the interest rate (coupon rate) that will be paid and when the loaned funds are to be returned (maturity date). Interest on bonds is usually paid every six months (semiannually). The main types of bonds are the corporate bond, the municipal bond, the treasury bond, the, treasury note, treasury bill, and the zero-coupon bonds.
The higher rate of return the bond offers, the more risky the investment. There have been instances of companies failing to pay back the bond (default), so, to entice investors, most corporate bonds will offer a higher return than a government bond. It is important for investors to research a bond just as they would a stock or mutual fund. The bond rating will help in deciphering the default risk.
Related Links
Bond Basics Tutorial - What are bonds and do they belong in your portfolio? Get all the answers in this comprehensive tutorial.
Corporate Bonds: An Introduction to Credit Risk - Corporate bonds offer higher yields, but it's important to evaluate the extra risk involved before you buy.
Junk Bonds: Everything You Need to Know - Don't be fooled by the name--junk bonds may be for you if you know how to analyze them.
Bonds Online - A great site dedicated to bond news and quotes.
InvestingInBonds.com - Comprehensive site with resources on many types of bonds.
Related Terms
Bond Ladder | Bond Rating | Bond Swap | Brady Bond | Callable Bond | Convertible Bond | Corporate bond | Coupon | Coupon Bond | Discount Bond | Eurobond | Housing Bonds | Indenture | Junk Bond | Maturity | Mello Roo's | Municipal bond | Obligor | Premium bond | Put Bond | Tax Anticipation Notes (TAN) | Treasury Bill | Treasury bond | Treasury note | Yield to Maturity | Zero-coupon bonds
1 |
A | B |
C | D |
E | F |
G | H |
I | J |
K | L |
M | N |
O | P |
Q | R |
S | T |
U | V |
W | X |
Y | Z
|
