Forbes  2 hrs ago  Comment 
A further deterioration of the junk bond market is a very serious risk for the global financial markets.
The Times of India  3 hrs ago  Comment 
A day after RBI governor Raghuram Rajan surprised markets by a cut in interest rate that was double the consensus expectation of 25 basis points, stocks, bonds and the rupee rallied as the impact of the central bank's decision sunk in.
Forbes  6 hrs ago  Comment 
'Skyfall' was a huge windfall for the Bond franchise?can 'Spectre' live up to the sky-high expectations?
Clusterstock  8 hrs ago  Comment 
This chart is just the worst.  Via Deutsche Bank's Torsten Sløk, this chart shows the decline in where Wall Street analysts thought the 10-year Treasury note would finish 2015.  Last summer, everybody thought yields were going higher and...
Wall Street Journal  8 hrs ago  Comment 
Investors are bracing for more large price swings across stocks, bonds and commodities heading into a month that is associated with market tumult.
Reuters  10 hrs ago  Comment 
NEW YORK, Sept 30 (IFR) - Bonds issued by troubled state-run Brazilian oil company Petrobras were enjoying a rare rally on Wednesday following news that it would raise local gasoline and diesel prices.
Wall Street Journal  Sep 30  Comment 
September proved one of the worst months for Europe’s corporate bond market in years, as a sharp selloff in bonds of Volkswagen and Glencore reminded investors that even the biggest bluechips can run into trouble.
Clusterstock  Sep 30  Comment 
New York Fed president Bill Dudley isn't worried about bond market liquidity.  What does he mean by bond market liquidity? Here's Dudley: I would define liquidity as the cost—both in expense and in time—of buying or selling an asset...


A bond is a type of debt. It's a loan from an investor to an institution, and in exchange the investor collects a predetermined interest rate. When a company needs capital to expand its business, it issues bonds to the public. Investors buy them with the understanding that they will collect the original principal plus interest when the bond matures at a set date. Federal, state, and municipal governments issue bonds for a similar purpose, to raise money for projects and public programs.

Types of Bonds

Bonds or Stocks?

Making the choice between stocks and bonds can be complex. In general, though, the key consideration is your own planning horizon.

Bonds are, in general, more predictable than stocks, and (on average and in general) give you lower returns. If you believe you'll need predictable access to money over, say, a 20-year period, you may be better off with bonds. For example, if you want to put aside a specific amount of money for a grandchild, expecting that money to be available for college in eighteen years, and not expecting to have other capital available. Insurance companies invest heavily in bonds for just this reason: it matches predictable liabilities (future insurance claims) against predictable cash flows (principal and interest).

Some bonds have tax advantages; for example, municipal bonds are typically exempt from state taxes in the state that issued them, as well as federal taxes. This can make them more attractive, though often you will find that the market has arbitraged away the difference, and that corporate (that is, taxable) bonds carry a higher gross yield -- and the same net yield after taxes. Although many investors invest in munis for just this reason -- they "don't like the taxman" -- they may not be making the optimum investment choice.

Bonds are not riskless, however. They carry credit risk ("will I get my money back?"), prepayment risk, liquidity risk and interest-rate risk. Many bonds give the bond issuer the right to repay the bond early -- which happens more often when rates are low, in other words, just when you don't want your money back. This is prepayment risk. Liquidity risk is the risk that you won't find a good price for your bond when you want to sell it -- because there are so many more bond issuers than stock issuers, and because bonds are not exchange-traded, there may not be a willing buyer. Interest-rate risk is the opposite of prepayment risk: when rates go up, the value of your bond will drop (it drops more, the further away it is from maturity). If your circumstances change and you need to sell the bond before maturity, you can lose capital that you would otherwise receive, if you held the bond to maturity.

Read More

A how to on investing in bonds

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