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For years, you have relied on the Handbook of Fixed Income Securities, by Frank J. Fabozzi, to help understand the dynamics and opportunities with the fixed income market. Int he expanded and revised Fifth Edition's 62 chapters, thirteen completely new chapters provide expanded coverage on topics including: The explosion of international bond trading; Increased securitization of real estate loans and other types of loans and receivables; State-of-the-art techniques for managing international bond portfolios; Latest strategies for managing corporate bond portfolios. |
Not as exciting as stocks, a bond is a loan which you lend to the issuer. The issuer will repay the entire loan at some time in the future and will pay you interest during the life of the loan. With stocks you are a part owner and with bonds you are a creditor. There are 4 differet categories of bonds:
All bonds fluctuate in price until the principle becomes due. If you buy a 20 year bond for $10,000 that pays you 10% interest a year, you will receive $1,000 per year. If interest rates go up to 15%, and you want sell your bond your bond before maturity you will get less then your $10,000 will be worth only less than $10,000. If interest rates go down to 5% then your bond will be worth more than $10,000 in the open market. Though if you hold to maturity you will receive $10,000. The riskier the bond the higher the yield.
Are guarenteed by the US Government. You can save commissions by buying them directly from the Federal Reserve.
These are the bonds of municipalities, cities, states, counties. These are usually tax exempt from federal, state and local taxes. These are useful if you are in a very high tax bracket due to the potential tax savings.
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