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The Hindu Business Line  1 hr ago  Comment 
The National Bank for Agriculture and Rural Development (Nabard) has moved the Finance Ministry to allow it to issue tax-free bonds to augment its resources. This comes in view of the lik...
MarketWatch  3 hrs ago  Comment 
Treasury yields wavered without a clear direction amid mixed reports, as month-end and quarter-end results are expected on Tuesday.
Reuters  6 hrs ago  Comment 
Bonds rose for a fifth consecutive quarter, while the rupee posted its first gain in four, on optimism sparked by India's economic outlook and rate cuts delivered by the Reserve Bank, but analysts warned momentum could wane.
Finance Asia  7 hrs ago  Comment 
Thanks to reverse inquiries from investors, the airline company is out with an unrated maiden US dollar bond just five months after its Singapore dollar debut.
The Economic Times  11 hrs ago  Comment 
The bond dealers who defined Wall Street success in the '80s -and who were immortalised by Tom Wolfe in his best-selling novel -seem to be losing power by the day.
Clusterstock  11 hrs ago  Comment 
Lloyds Banking Group just got permission to stop paying investors billions of pounds worth of returns from a type of investor bond that helped keep it afloat during the credit crisis. Lloyds received £20.5 billion in state handouts between...
Mondo Visione  11 hrs ago  Comment 
Deutscher Studenten Wohn Bond I S.A., a subsidiary of Deutsche Real Estate Funds S.A., is planning to issue a bond (ISIN: DE000A1ZW6U2) in the Entry Standard of the Frankfurt Stock Exchange. The bond can be subscribed from today until 2 April...
Green World Investor  Mar 31  Comment 
Green India Bonds India came out with its first ever green India bond, under Prime Minister Modi’s leadership. Mr. Modi has been pushing the country hard on the solar path lately. The country has set up an ambitious target to install 100 GW of...
Clusterstock  Mar 30  Comment 
On October 15, 2014, there was a "flash crash" in US Treasuries.  The yield on the US 1o-year note fell 34 basis points — or 0.34% — from 2.2% to as low as 1.86% in a matter of just minutes.  And a report from Bloomberg's Matt Boesler on...




 
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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.

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A how to on investing in bonds

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