The Hindu Business Line  3 hrs ago  Comment 
A sharp decline in profitability and mounting losses could wipe out the revenue reserves of some public sector banks (PSBs) and affect their ability to make interest payments on their Additional Tier...
The Hindu Business Line  3 hrs ago  Comment 
Will help banks boost treasury income as core lending remains muted
MarketWatch  5 hrs ago  Comment 
Investors sold Treasury bonds on Wednesday, driving the 10-year yield to its lowest level in four months while making room for an influx of new debt being sold at auction.
The Economic Times  9 hrs ago  Comment 
A sharp dip in profitability and mounting losses could wipe out the revenue reserves of some public sector banks, Crisil said.
Financial Times  Oct 12  Comment 
BNY Mellon left standing to settle transactions across US government bonds and funding market  Oct 12  Comment 
AEVIS VICTORIA SA increases its 2.0% straight bond issued in September 2016 EQS Group-Ad-hoc: AEVIS VICTORIA SA / Key word(s): Bond AEVIS VICTORIA SA increases its 2.0% straight bond issued in September 2016 12.10.2016 / 07:15 Release of an ad...
Financial Times  Oct 12  Comment 
Dollar and bond yields stay firm while oil retreats
The Economic Times  Oct 12  Comment 
“What is required for liquidity is symmetric information about the payoff of the security that is being traded so that adverse selection does not impair the market.”  Oct 12  Comment 
FRANKFURT (dpa-AFX) - Less than a week after raising $3 billion in a private debt sale, Deutsche Bank AG (DB) returned for another $1.5 billion, offering yields that were more than twice what it paid to borrow a year ago, Bloomberg reported. The...


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

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki