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MarketWatch  47 min ago  Comment 
Treasury yields jumped after new government bond issuance from France, Spain and the U.K. flooded the market, diverting the attention of investors looking to get in on the action.
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JUST a few decades ago, an asset manager wanting to trade shares, bonds or derivatives almost always had to call up the trading desk at a big investment bank. Today shares and many derivatives can be traded with a few simple clicks (or even in...
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Beijing wants foreigners to invest in its debt market but fears over defaults have hit demand
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Rates for home loans fell below the psychologically important 4% level as inflows into the bond market weigh on the mortgage market.
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The Economic Times  Apr 19  Comment 
NTPC today said its board has approved the proposal to increase the amount to be raised by issuing bonds in international markets to USD 6 billion from USD 4 billion.
Wall Street Journal  Apr 19  Comment 
Bonds have rallied sharply in the past six weeks, but other assets appear unfazed. Political jitters and positioning explain some of the moves, but it also leaves the possibility that investors should be more worried about the future.
Yahoo  Apr 19  Comment 
The figure matched what Morgan Stanley had produced before cutting 25 percent of the business's staff, showing that the bank can do more with less. The bank also delivered more from bond trading than arch rival Goldman Sachs Group Inc (GS.N), a...




 
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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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