BondsBernadette Archambault

Sam Edge

What are Bonds?• Bonds are used by companies who borrow funds for a specific length of

time with a fixed interest rate.    

• http://www.investopedia.com/terms/b/bond.asp

What is Interest?

• Interest is money being paid or charged for money being taken out/borrowed from the use of money

• It can also be defined as the percentage of money borrowed that was borrowed and will be paid back with in a given time span, most likely a year.

http://dictionary.reference.com/browse/interest

What is Maturity Date?

• Maturity Date is when the everything-debt, interest, and other financial details- are paid in full.

  http://www.investopedia.com/terms/m/maturitydate.asp

What is Face Value?

• Face Value is the amount to be paid back to the bondholder after maturity date, which is normally around $1000.

http://www.investopedia.com/terms/f/facevalue.asp

 What is a Coupon Bond?• A coupon bond is when partialy

payments on interest is paid back to the loaner.

 http://www.investopedia.com/terms/c/couponbond.asp

 

What is a Portfolio?

• A portfolio is a way to divid up different information into different

classes. Such as it can be in stocks or in bonds or other investments. The

portfolio is a way to keep track of the interest and to keep the risk of losing

it to a minimum.    

http://www.investopedia.com/terms/p/portfolio.asp

What is Diversification?• A diversification is a way to keep risks to a

minimum.  • http://www.investopedia.com/terms/d/diversificati

on.asp

Types of Goverment Bonds

There are three types of goverment bonds-    1. Bills    2. Notes    3. Bonds • Bills are debt protections that don't last a year • Notes are debt protections that last 1-10 years • Bonds are debt protections that last more than

10 years  http://www.investopedia.com/university/bonds/bonds4.asp

However there are more types of bonds that are usesd by companies.

 • Municiple Bonds, Corporate Bonds, and Zero-

Coupon Bonds. • Municiple Bonds are also known as "munis".

They have a good advantage, because when the federal taxes come, their returns are free. So they can be a good investment, however it all depends on the buyer personal sitiuation as well.

 • Corporate bonds are a way for a company to

issue bonds as well as stocks. There are three lengths of time a corporate bond can go for - less than five years, 5 to 12 or over 12 years. Also if a company is well off then that could mean lower intrest rate for the person investing in the company.

Zero-Coupon Bonds

• With this bond the invester pays no coupon payments and is given the

bond for a great discount from what it is worth.

 Such as a bond worth $2000 however

the invester only pays $785 and 15 years until the Maturity Date. So you pay $785 for a bond that in 15 years

will be worth $2000.   

http://www.investopedia.com/university/bonds/bonds4.asp

Similarities  and Differences

  The differences in these bonds are: 1) The purposes they are created for2) Who uses them3) How they help companies invest4) How long they last

Junk Bonds

• A Junk Bond is a bond who's worth is BB or lower. Howere it is marketed as a higher bond such as AAA but that is only to attract innocent people to invest in it. 

 • However that does not mean nothing.

People, after the recession, bought more Junk bonds than Higher rank bonds.

  http://www.abcsofinvesting.net/what-are-junk-bonds/

The Relationship Between Price and Yeild of a Bond

 The relationship between  the price and yield of a bond is if one goes up the other goes down.  As the markets add more interest-prices fall on the bonds causing a negitive slope in the yield and price chart.  You can calculate the currant yield by using this formula.                                Currant Rate =       Annual Dollar Interest Paid  *100                                        Market Price  http://www.investopedia.com/university/advancedbond/advancedbond3.asp

Difference Between Stocks

and Bonds

  The difference between a stock and a bond is:Stocks are open  as long as the invester wants while bonds are until a certain maturity date.

Stocks are partial ownership by the companies they are from while bonds is borrowing money and paying it back within a certain time length.

Economy and How it Affects Bonds 

  

Treasury bonds impact the economy by providing extra spending money for the government and consumers. This is because Treasury bonds are

essentially a loan to the government that is usually purchased by domestic consumers.

Who Issues Bonds? Who Invests In Bonds? How Do You Buy A Bond?

Why Should You Buy a Bond?   

Almost everyone can invest in bonds. You buy your bond from which ever company you choose to buy from. Bonds are a good idea to invest in becuase they benifit you in the long run. In the future you gain intrest throughout the years in

your bond. 

Do Bonds Mature During a Certain Time?

Yes, bonds do mature during a certain time, They mature over a period of years.

Depending on how much you put in the interrest will vary, but usually after a year of

the date purchased the bond the bond will slowly gain interest.

Interest Rates Effects The Price Of Bonds.

Fixed Income SecuritiesInterest rates effect the price of bonds  by The risks of fixed-income securities such as Interest

rate risk, Credit risk and more.• Interest rate risks are when rates are rising,

market prices of existing debt securities will fall. 

• Credit risk is a change in either the issuer’s credit rating or the market’s perception of the

issuer’s business prospects will affect the value of its outstanding securities.

•http://www.investinginbonds.com/learnmore.asp?catid=5&subcatid=20&id=163 

How Do Brokers Make Money off of Bonds?

Brokers make money off of bonds from the exchange of bonds between the people trading

it. They also have a little risk in the process because they don't have it for long.

    http://www.investopedia.com/terms/b/bond-broker.asp

Interesting Facts • Approximately 55 million people own

savings bonds.•  Savings bonds are a popular gift for

newborns because "one size fits all" and the gift "grows" in value as the child grows.

• Savings bonds have been awarded to people who bought cars, appliances, and even cemetery plots.

• Savings bonds can earn interest tax-free for your college education (if you meet certain

• requirements).• Saving bonds are not subjected to the

up's and down's of the stock market.•  

http://www.econedlink.org/lessons/docs_lessons/385_FunFacts1.pdf

 

Questions1. What is a bond?

 2. What is diversification?  

 3. What is maturity date?

 4. About how many people have saving bonds?

 5. What are junk bonds?

   Answers 

1. Bond are a way to borrow funds for a specific length of time with a interest rate that is the same.

 2. Diversification keeps the risk of losing

information to a minimum. 

3. Maturity date is the debt, interest are paid off in full.

 4.  About 55 million people own savings bonds.

 5.  Junk bonds are bonds that are BB or lower but

are marketed at AAA to get people to buy it . However after the recession alot of people have

bought junk bonds.

Addition Information

It is a type of a portfolio that purpose is to ruduce to risk of losing everything at once. It can be in bonds or real estate, it is to prevent a company from losing everything in one shot. Such as real estate could fall while bonds are the same. The company only lost only one portion of their assets.  http://www.investorwords.com/1504/diversification.html

Stocks are part of a company that is divided up into portions that people can buy to be part of the company. Bonds have a maturity date while stocks do not. Bonds are loans that are paid back over time by debtor to the creditor.http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Stock#History

Additional information

You can purchace a bond through your bank however if your bank does not have the means for one you can open a gaverment bond throught the Treasury Direct. A person can buy a bond directly from the Treasury. Zero-coupon bonds is invested in copmanies but you don't recieve interest payment during the time the copmany has your money.Coupon bonds is when interest is paid more annually.A junk bond is the same as a regular bond expect that it is like an IOU from a company.http://www.investopedia.com/university/bonds/bonds6.asp 

http://www.finweb.com/investing/zero-coupon-bonds.htmlhttp://www.wisegeek.com/what-is-a-coupon-bond.htm

Additional infromation

Bond Rating Grade Risk Moody's Standard & Poor's AaaAAAInvestmentLowest Risk Aa AAInvestmentLow Risk AAInvestmentLow Risk BaaBBBInvestmentMedium Risk Ba, BBB, BJunkHigh Risk Caa/Ca/CCCC/CC/CJunkHighest Risk CDJunkIn Default

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