what are bonds?financial coach
Post on 01-Nov-2014
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What Are BondsWhat Are Bonds
Hot Tip
Bonds are debt securities issued by governments, corporations, federal agencies, and more.
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Hot Tip
The government is borrowing your money for a predetermined interest rate and period of time.
The interest payments are made over the life of the bond.
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Hot Tip
Typically interest is paid every 6 months
Principal is paid back at the end of the term.
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Hot Tip
Advantage of Bonds over Stocks:• Gains are pre-determined
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Diagram
RISKRISK
Junk bonds pay Higher interest rates
Payments are not guaranteed
Risk levels are assigned based on the likelihood the bond issuer
fulfills their obligation
RISKS:
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Diagram
RISK
PRICE
MATURITY
Main Main Components of Components of
analyzing analyzing A BondA Bond
Main Main Components of Components of
analyzing analyzing A BondA Bond
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Diagram
Primary Market:
•Price typically is the same as the value of the bond
Bond InvestingHow Does it Work ?
Secondary Market:•Bond prices fluctuate depending on interest rate & health of the company
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