Floating rate note

Difference between Fixed and Floating rate bonds. Unlike a fixed-rate bond, a floating rate note is a type of bond that contains a variable coupon that is equal to a money market reference rate, or a federal funds rate plus a specified spread.

JCB added exposure early in the month after triggering stop loss levels which was ultimately frustrating in the corresponding pullback that followed later in the month. We continue to believe the RBA will remain on hold at 1.

Glossary of Bond Terms

RFI on the U. S. Treasury Market Structure Watch our TreasuryDirect demo on logging in. Watch our demo on how to buy a gift savings bond In TreasuryDirect.

Determine your investment strategy. Many people use the interest they earn on their bond investments, and the bond maturity payments when the bond is redeemed, to invest in more bonds. By having investments in multiple bonds, you will diversify your portfolio and earn residual interest. You can also time your bond maturities to achieve different payoff schedules.

The strategy you choose will depend on your savings goals. While you can invest as much money in bonds as you would like, remember that the stock market does tend to average higher returns than bonds in the long term. You should consider bonds as one of many investment options for long term investments.

Other options include equities, corporate bonds, and securities options. Build a bond ladder. One investment strategy is to build a bond ladder, so that at a recurring interval you buy a new bond with the proceeds of the sale or maturity of another bond investment in your portfolio. Bond ladders are advantageous for helping an investor avoid risks from fluctuating interest rates. They can also provide a steady stream of income that you can modify to suit your needs as they change over time.

Buy bonds that mature at the same time. You may also consider buying many bonds that all mature around the same time, such as for a college savings account. You will receive investment income every six months until then that you can reinvest or use for expenses, and when your daughter graduates from high school you can use the bond par value payouts to pay for her college.

Decide how you will buy. If you are a borrower who plans to buy multiple kinds of bonds, purchase and trade often, or purchase and trade other kinds of securities such as stocks, you should consider using a broker to manage your investment activity.

Investment brokers can help you develop an investment strategy, or do the legwork to implement yours. If you're not planning and buying multiple types of securities, the US Treasury allows investors to buy and sell bonds directly through their site www.

Brokers can be generally categorized as either full-service or discount brokers. This may be as basic as an e-trade account, where you register with the broker, e-trade, and use their service to buy, sell, and monitor your investments. A full-service brokerage can be as personalized as an agent who develops an investment strategy for you, and even buys and sells on your behalf with your permission. If you are investing a small amount of money or are new to investing, a discount broker is probably your best choice.

Using a discount broker will save you the higher cost of full service, and give you the opportunity to learn a bit about trading while making your first investments. The US Treasury holds bond auctions every February, May, August, and November, when it issues new bonds with maturity dates 30 years in the future.

In the other months of the year, the treasury reissues older bonds, with maturity dates closer to the date of sale. You can place bids on the auction date itself, or you can schedule purchases in advance by specifying the par value of stock you will buy and agreeing to pay the determined noncompetitive purchase price. Treasury bond auctions are made up of two phases, first of competitive and then of noncompetitive bidding.

During competitive bidding, bidders specify the par value of bonds they want to purchase, as well as the yield they require. They are awarded all, some, or none of the par value they bid on, based on how their bid stacks up against the other bidders. After competitive bidding is complete, the Treasury takes the average bond yield rate of the wining competitive bids, and awards noncompetitive bids at that yield.

Noncompetitive bidders agree to accept the high yield determined by the competitive auction, and specify the amount of bond par value they will purchase. Competitive bidders are usually institutions or market experts, and they bid against each other for bond par value.

They bid stating the amount of par value they want to buy and the yield they want to receive. Competitive bidding is complex and requires more knowledge than this outline provides. To place a competitive bid you should learn about the market, look at recent bond sale discount or premium rates for the type of bond you want to buy, and work with a broker or on your own to predict how inflation stacks up against the interest rate offered on the bond.

The closing price of a bond is the last trading price before the exchange or market in which it is traded closes for the day.

Given the existence of after-hours trading, the opening price at the start of the next trading day may be different from the closing price of the day before. Upper and lower limits cap and floor, respectively on the interest rate of a floating-rate security. Securities or property pledged by a borrower to secure payment of a loan.

If the borrower fails to repay the loan, the lender may take ownership of the collateral. Collateral for CMOs consists primarily of mortgage pass-through securities or mortgage loans, but may also encompass letters of credit, insurance policies, or other credit enhancements. The process by which a borrower pledges securities or property or other types of financial assets in order to provide security or collateral toward repayment of a loan or debt. A type of asset-backed security ABS , CDOs are backed by fixed income assets such as bonds, receivables on loans—usually non-mortgage—or other debt that have different levels of risk.

Shares of the pool are sold to investors, divided into the different risk classes or "tranches" enabling the isolation of credit risk to reduce the risk of loss due to default. Each tranche usually has different maturities and risks. Commercial mortgage-backed securities CMBS have as underlying collateral loans on hotels, multifamily housing, retail properties, and office or industrial properties.

However, default risk is greater on commercial loans. Short term, unsecured bond notes issued by a corporation or a bank to meet immediate short term needs for cash. Maturities typically range from 2 to days.

Commercial paper is usually issued by corporations with high credit ratings and sold at a discount from face value. Commissions differ in how they are calculated, such as a percentage of the value of a transaction or flat fee amount, and including whether the investor is using a bank, brokerage or online firm.

Investors should be sure to ask and to understand what commission or other sales fees are charged by a broker or agent to make an investment transaction, including if such information is not provided in writing. A share representing participation in the ownership of an enterprise, generally with the right to participate in dividends and in most cases to vote on major matters affecting stockholder interests. A CMO tranche that absorbs a higher level of the impact of collateral prepayment variability in order to stabilize the principal payment schedule for a PAC or TAC tranche in the same offering.

A sale of municipal securities by an issuer in which underwriters or syndicates of underwriters submit sealed bids or oral auction bids to purchase the securities.

The securities are won and purchased by the underwriter or syndicate of underwriters which submits the best bid according to guidelines in the notice of sale. This is contrasted with a negotiated underwriting. The value of a zero-coupon bond at any given time, based on the principal, with interest compounded at a stated rate of return over time. Compounding is the process by which investment interest earnings added to the investment principal form a larger base on which to accumulate additional earnings over time.

Fractional discount from the public offering of new securities at which the underwriter sells the bonds to dealers not in the syndicate. A document used by securities dealers and banks to state in writing the terms and execution of a verbal arrangement to buy or sell a security.

A type of convertible bond with an innovative feature that may provide insurance for companies like banks during a financial crisis.

For example, a CoCo bond, also referred to as contingent capital bonds, would mandatorily convert into the company's common shares when one or more triggers occur, such as capital levels falling below a pre-specified level.

Such bonds converting to stock would provide the bank a boost to its capital, speeding recapitalization of a bank in distress. Also referred to as contingent capital bonds. The issuer must also provide notice of material events. For mortgage-related securities, the risk that declining interest rates will accelerate the assumed prepayment speeds of mortgage loans, returning principal to investors sooner than expected and compelling them to reinvest at the prevailing lower rates.

A mortgage loan that is based solely on real estate as security, is not insured or guaranteed by a government agency, and is eligible for purchase or insurance by Fannie Mae or Freddie Mac. A corporate bond that can be exchanged, at the option of the holder, for a specific number of shares of the company's stock. Because a convertible bond is a bond with a stock option built into it, it will usually offer a lower than prevailing rate of return. The more convex a security is, the more its duration will change with interest rate changes.

A bank index reflecting the weighted average interest rate paid by savings institutions on their sources of funds. There are national and regional COFI indexes. One of two entities in a traditional interest rate swap. In the municipal market a counterparty and a party can be a state or local government, a broker-dealer or a corporation.

Bonds issued by corporations. Corporations use the funds they raise from selling bonds for a variety of purposes, from building facilities to purchasing equipment to expanding their business. Corporate bonds also called corporates are debt obligations, or IOUs, issued by private and public corporations. A feature of a bond that denotes the amount of interest due and the date payment is to be made.

In the case of registered coupons see "Registered Bond" , the interest payment is mailed directly to the registered holder. Bearer coupons are presented to the issuer's designated paying agent or deposited in a commercial bank for collection.

Coupons are generally payable semiannually. The actual dollar amount of interest paid to an investor. The amount is calculated by multiplying the interest of the bond by its face value. The interest rate on a bond, expressed as a percentage of the bond's face value.

Typically, it is expressed on a semi-annual basis. Covered bonds, at their most basic, are debt securities backed by a guarantee from the issuing entity and secured by a dynamic pool of assets on that entity's balance sheet.

The issuer is typically a regulated financial institution. Germany introduced covered bonds, known as Pfandbriefe, in —the bonds have continued to be a widely used funding tool for mortgage loans and public works projects across Europe for over years. Usually the Federal Reserve Commercial Paper Composite, calculated each day by the Federal Reserve Bank of New York by averaging the rate at which the five major commercial paper dealers offer "AA" industrial commercial paper for various maturities.

Most CP-based floating-rate notes are reset according to the and day CP composites. The index for measuring the inflation rate is the non-seasonally adjusted U. The CPI-U was selected by the Treasury because it is the best known and most widely accepted measure of inflation. A credit default swap is akin to an insurance policy in the event of certain credit events such as bankruptcy, failure to pay and restructuring of debt.

The CDS contract protects the buyer against the loss of principal in an underlying asset if a credit event occurs. The buyer of protection pays a premium-a fixed periodic payment--usually on a quarterly basis, to the seller of protection until a credit event occurs or the contract matures, whichever is earlier. The use of the credit of a stronger entity to strengthen the credit of a weaker entity in bond or note financing.

This term is used in the context of bond insurance, bank facilities and government programs. A company that analyzes the credit worthiness of a company or security, and indicates that credit quality by means of a grade, or credit rating. Designations used by ratings services to give relative indications of credit quality.

A yield difference, typically in relation to a comparable U. Credit spread also refers to the difference between the value of two securities with similar interest rates and maturities when one is sold at a higher price than the other is purchased.

The current remaining monthly principal on a mortgage security. Current face is computed by multiplying the original face value of the security by the current principal balance factor. A financing structure under which the old bonds are called or mature within 90 days of the issuance of the new refunding bonds. The Committee on Uniform Security Identification Procedures was established by the American Bankers Association to develop a uniform method of identifying securities.

The convention used to calculate the number of days in an interest payment period. A securities firm or department of a commercial bank that engages in the underwriting, trading and sale of municipal or other securities.

Department of commercial bank that engages in the underwriting, trading and sale of municipal or other securities. Unsecured debt obligation, issued against the general credit of a corporation, rather than against a specific asset.

Statutory or constitutional limit on the principal amount of debt that an issuer may incur or that it may have outstanding at any one time. The fund into which are paid monies which are required by the trust agreement or indenture as a reserve against a temporary interruption in the receipt of the revenues or other amounts which are pledged for the payment of the bonds. A failure by an issuer to: Termination of the rights and interests of the trustee and bondholders under a trust agreement or indenture upon final payment or provision for payment of all debt service and premiums, and other costs, as specifically provided for in the trust instrument.

The face amount, or par value, of a bond or note that the issuer promises to pay on the maturity date. A financial product that derives its value from an underlying security.

In the tax-exempt market, there are primary and secondary derivative products. Investors who sell such discos prior to maturity may lose money. The amount by which the par value of a security exceeds its purchase price. The opposite of compounding, discounting allows an investor to multiply an amount by a discount rate to compute the present or discounted value of an investment.

The effective spread to maturity of a floating-rate security after discounting the yield value of a price other than par over the life of the security. Short-term obligations issued at a discount from face value, with maturities ranging from one to days. Discount notes have no periodic interest payments; the investor receives the note's face value at maturity. The key interest rates central banks charge on overnight loans to commercial and member banks.

Changes in the rate by the Federal Reserve generally indicate future changes in monetary policy. In Europe, the European Central bank focuses on three key interest rates for the Euro area as its way to manage inflation and the economy: The rates are closely watched by markets as setting these rates are a prime way for a central bank to manage inflation.

Commercial banks use the discount rate as a benchmark for the interest rates they charge on other financial instruments and products, including commercial and consumer loans. Return of principal to unit trust shareholders, usually when a bond in the portfolio reaches maturity, is called or, if necessary, is sold prior to maturity. A strategy by which an investor distributes investments among different asset classes and within each asset class among different types of instruments in order to protect the value of the overall portfolio in case of changes in market conditions or market downturn and reduce exposure to risk.

Account structure that is divided as to liability, and not as to sales. Securities that are exempt from state and local as well as federal income taxes are said to have double or triple tax-exemption. In some states a bond secured in the first instance by a user charge, e. Dual-currency bonds are bonds in which principal payments are in one currency and coupon payments are in another currency. This type of bond is used for foreign bonds, when an issuer issues bonds in a foreign country and makes coupon payments in that country's currency, but principal payments are made in the currency of the issuer's country of residence.

Duration takes into account a bond's interest payments in measuring bond price volatility and is stated in years. The duration of a bond is a measure of its price sensitivity to interest rates movements, based on the average time to maturity of its interest and principal cash flows. Duration enables investor to more easily compare bonds with different maturities and coupon rates by creating a simple rule: Bond duration measurements help quantify and measure exposure to interest rate risks.

Bond portfolio managers increase average duration when they expect rates to decline, to get the most benefit, and decrease average duration when they expect rates to rise, to minimize the negative impact. The most commonly used measure of interest rate risk is duration. In reference to debt securities, a type of auction when a competitive bidding process establishes the interest rate on a security typically municipal or corporate bond.

The lowest bid rate which all shares can be sold at par determines the interest rate. This is the rate paid for entire issue during a given period. A Dutch auction is also used in Treasury auctions, allowing each successful competitive bidder and noncompetitive bidder to be awarded securities at the price equivalent to the highest accepted rate or yield. Differing from other types of Dutch auctions, Treasury accepts various prices, taking the highest bids first and working through progressively lower bids until an issue is completely sold.

Most revolving ABS are subject to the risk of early-amortization events-also known as payout events or early calls. A variety of developments, such as the following, may cause an early-amortization event: The risk to bond investors that high-yielding bonds will be called early, with the result that proceeds may be reinvested at lower interest rates. Statistical measures of current conditions in an economy.

Economic indicators together provide a picture of the overall health of an economy or economic zone and how bond prices and yields might be affected. Economic risk describes the vulnerability of a bond to downturns in the economy. For example, virtually all types of high-yield bonds are vulnerable to economic risk. In recessions, high-yield bonds typically lose more principal value than investment-grade bonds.

If investors grow anxious about holding low-quality bonds, they may trade them for the higher-quality debt, such as government bonds and investment-grade corporate bonds. The most common embedded option is a call option, giving the issuer the right to call, or redeem, the principal of a bond before the scheduled maturity date.

The majority of external emerging market bonds are government bonds. Eurobonds are bonds that are denominated in a currency other than that of the European country in which they are issued. They are usually issued in more than one country of issue and traded across international financial centers. Supranational organizations and corporations are major issuers in the Eurobond market. The European Union Countries that use the Euro as the single currency and in which a single monetary policy is conducted under the responsibility of the European Central Bank.

In sharing a common currency, the member states of the European Economic and Monetary Union EMU are governed by the same monetary policy but this uniformity does not extend at the country level to alignment of all economic, regulatory and fiscal matters, including matters of taxation.

These include poor management, changes in management, failure to anticipate shifts in the company's markets, rising costs of raw materials, regulations and new competition.

Another kind of event risk is the possibility of natural or man made disasters affecting an issuer's ability to repay its obligations. Events that adversely affect a whole industry may have a spillover effect on the bonds of issuers in that industry. The net amount of interest payments from the underlying assets after bondholders and expenses are paid and after all losses are covered.

Excess spread may be paid into a reserve account and used as a partial credit enhancement or it may be released to the seller or the originator of the assets. A bond with an option to exchange it for shares in a company other that the issuer. A fund that tracks an index, a commodity or a basket of assets.

It is passively-managed like an index fund, but traded like a stock on an exchange, experiencing price changes throughout the day as they are bought and sold. Bond ETFs like bond mutual funds, hold a portfolio of bonds and can differ widely in their investment strategies. Refers to those types of privately owned or privately used facilities which are authorized to be issued on a tax-exempt basis under the Internal Revenue Code.

The Tax Reform Act of amended prior law to exclude the following types of facilities from those which can be financed on a tax-exempt basis: The date on which principal is projected to be paid to investors. It is based on assumptions about collateral performance. The risk that investors' principal will be committed for a longer period of time than expected. In the context of mortgage- or asset-backed securities, this may be due to rising interest rates or other factors that slow the rate at which loans are repaid.

A decimal value reflecting the proportion of the outstanding principal balance of a mortgage security, which changes over time, in relation to its original principal value. The interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

The target federal funds rate is set by the Federal Reserve Board's Federal Open Market Committee and is a principal tool of monetary policy. For more information, see www. Calculated each day by the Federal Reserve Bank of New York by averaging the rate at which the five major commercial paper dealers offer "AA" industrial Commercial Paper for various maturities.

The date on which the principal must be paid to investors, which is later than the expected maturity date. Also called legal maturity date. A consultant to an issuer of municipal securities who provides the issuer with advice with respect to the structure, timing, terms or other similar matters concerning a new issue of securities.

A municipal securities employee who is required to meet qualifications standards established by the MSRB. The individual is the person designated to be in charge of the preparation and filing of financial reports to the SEC and other regulatory bodies.

A mortgage featuring level monthly payments, determined at the outset, which remain constant over the life of the mortgage. A bond whose interest rate is adjusted periodically according to a predetermined formula; it is usually linked to an interest rate index such as LIBOR.

Refers to the structure which is established in the bond resolution or the trust documents which sets forth the order in which funds generated by the enterprise will be allocated to various purposes. A security that is registered as to principal and interest, payment of which is made only to or on the order of the registered owner.

Financial futures are a contract agreeing to buy or sell a specified amount of an underlying financial instrument at a specific price on a specific day in the future. The price is agreed to at the time of the contract. Financial futures are usually of three main types: Because futures are complicated and risky, with the potential for losses not limited to your original investment, futures products are not suitable for many individual investors.

In the municipal market, an agreement to purchase or sell the municipal bond index The Bond Buyer Bond Index for delivery in the future. The value of an asset at a specified date in the future, calculated using a specified rate of return. Refers to the type of project proceeds or funds received from a muncipal bond issuance are used for such as government use, education, water, sewer and gas, health care. Pass-through mortgage securities on which registered holders receive separate principal and interest payments on each of their certificates.

Ginnie Mae I securities are single-issuer pools. Pass-through mortgage securities on which registered holders receive an aggregate principal and interest payment from a central paying agent on all of their Ginnie Mae II certificates. Ginnie Mae II securities are collateralized by multiple-issuer pools or custom pools, which contain loans from one issuer, but interest rates that may vary within one percentage point.

The issuance platform used by most GSEs when issuing "global" debt into the international marketplace or a particular foreign market. Has same credit characteristics as nonglobal debt but is more easily "cleared" through international clearing facilities.

Also called good-faith check, if delivered as a check, or good-faith deposit. Financing entities created by Congress to fund loans to certain groups of borrowers, such as homeowners, farmers and students. Debt issued by government-sponsored enterprises GSEs —those financing entities created by Congress to fund loans to certain groups of borrowers such as homeowners, farmers and students. Through the creation of GSEs, the government has sought to address various public policy concerns regarding the ability of members of these groups to borrow sufficient funds at affordable rates.

There are organizational differences among the GSEs although all are established with a public purpose. All GSE debt is not guaranteed by the federal government. GSE-issued debt securities can be structured to offer investors fixed or floating interest rates. While the basic structures share many characteristics of non-structured fixed- or floating-rate debt, many variations are possible.

A special-purpose vehicle set up to issue fixed-rate capital securities and use the proceeds to purchase debt of the parent company. A commitment or investment made with the intention of minimizing the impact of adverse price movements in an asset or liability, offsetting potential losses.

Due to the increased risk of default, these bonds are typically issued at a higher yield than more creditworthy bonds.

A type of inflation-adjusted security issued by the Treasury. Series I savings bonds pay interest according to an earning rate that is partly a fixed rate of return and partly adjusted for inflation. A market is illiquid when there is insufficient cash flowing to meet financial debts or obligations. In the context of bonds or other investments, illiquid refers to a bond or other investment that cannot be converted into cash quickly or near prevailing market prices.

Liquid investments or assets are defined as those that can be converted into cash quickly and without great impact on the price of the asset. Bond resolutions and trust agreements are functionally similarly types of documents, and the use of each depends on the individual issue and issuer.

For any particular date and any particular inflation-indexed security, the Reference CPI-U applicable to such date divided by the Reference CPI-U applicable to the original issue date or dated date, when the dated date is different from the original issue date.

Tax-exempt bonds where the rate is periodically reset on a formula that incorporates an index, such as The Securities Industry and Financial Markets Association Municipal Swap Index. A security issued by a state, political subdivision or certain agencies or authorities, for certain specific purposes, but backed by the credit of a private enterprise.

The rate of increases in the price of goods and services usually measured on an annualized basis. For an inflation-indexed security, the principal amount of the security, derived by multiplying the par amount by the applicable index ratio. Securities designed to protect investors and the future value of their fixed-income investments from the adverse effects of inflation.

The delivery of a new issue by the issuer to the original purchaser, upon payment of the purchase price. The price based upon yield to maturity stated as a percentage of par at which the account determines to market the issue during a set period of time, called the initial offering period. Members of the account may not offer any part of the issue at any other price during that period.

Large organizational entities with significant amounts of money to invest such as insurance companies, pension funds, investment companies and unit trusts. Institutional investors account for a majority of overall volume in the bond markets. The major insurers are identified by these symbols:.

National Public Finance Guarantee Corp. Radian Asset Assurance Inc. Interest rates change in response to a number of things including revised expectations about inflation, and such changes in the prevailing level of interest rates affects the value of all outstanding bonds.

An agreement where a party pays a premium up front or in installments to the counterparty. If the floating interest rate exceeds a stated fixed rate during the time of the cap agreement, the counterparty will pay the difference, based on the notional amount.

The cap rate is also called the strike rate. An interest rate cap can protect the purchaser against rising interest rates. Interest-rate swaps are a derivative financial instrument which exchange or swap fixed rate interest rate payments for floating rate interest rate payments. Usually these swaps are an agreement between to parties to exchange one stream of interest payments for another over a set period of time. Investors use interest-rate swaps for debt portfolio management; corporate finance; to lock in interest rates; and to manage and hedge risk.

Interest-rate swaps have become critical to the bond markets. Initially interest-rate swaps helped corporations pay fixed rates and receive floating rate payments or vice versa depending on their business needs. But then, swaps were seen to reflect market expectations and sensitivity to interest rates and credit concerns via what an interest-rate swap reflects which is a desire to exchange loans-one that was borrowed at a fixed rate and the other at a floating rate tied to, most commonly, London Interbank Offered Rate LIBOR.

The graph plotting swap rates across available maturities became known as the swap curve. Swap rates suggest what the market expects the direction of LIBOR rates to be; and reflect the market's perception of credit quality. The swap rate curve is an important interest-rate benchmark for the bond markets and is commonly used in Europe as the pricing reference for all European government bonds.

A primary derivative tax-exempt bond. The interest payable is based on a formula that has a ceiling rate less a specified floating rate index or bond. The interest rate structure which exists when short-term interest rates exceed long-term interest rates. See ascending, or positive, yield curve. These bonds tend to issue at lower yields than less creditworthy bonds. A security or tranche that pays only interest and not principal. IO securities are priced at a deep discount to the "notional" amount of principal used to calculate the amount of interest due.

ISIN is the numbering code system set up by the International Organization for Standardization and used by internationally traded securities to identify and number each issue of securities.

An ISIN code has twelve characters structured as follows: The NNA of the appropriate country administers the 9 digit security identification number. The issue description includes the name of the issuer of the bonds. If a municipal bond, the issuer is typically a state, political subdivision, agency or authority which borrows money through the sale of bonds or notes.

Corporate bonds are issued by private corporations. Underwriting accounts are headed by a manager. Ginnie Mae II pass-through mortgage securities collateralized by pools which are generally larger and contain mortgages that are often more geographically diverse than single-issuer pools.

Mortgage loans in jumbo pools may vary in terms of the interest rate within one percentage point. A Z-tranche that may start receiving principal payments before prior tranches are retired if market forces create a "triggering" event, such as a drop in Treasury yields to a defined level, or a prepayment experience that differs from assumptions by a specific margin. Although jump Z-tranches are no longer issued, some still trade in the secondary market. For example, common stock is junior to preferred stock, which is junior to unsecured debt such as debentures, which is junior to secured debt.

A technique for reducing the impact of interest-rate risk by structuring a portfolio with different bond issues that mature at different dates. An opinion concerning the validity of a securities issue with respect to statutory authority, constitutionality, procedural conformity and usually the exemption of interest from federal income taxes if this relates to a municipal bond issue.

To better understand bonds and bond funds, start by familiarizing yourself with some basic concepts, starting with what a bond is. Bonds are issued by many different entities, from the U.

Here is an overview of some of the most common types of bonds, and key characteristics of each. Bond return is inversely related to interest rates: Yield is a general term that relates to the return on the capital you invest in the bond.

There are a number of types of yield and more than one way to figure return on your bond investment. Bonds are bought and sold in huge quantities in the U. The way you buy and sell bonds often depends on the type bond you select. When you invest in bonds and bond mutual funds, you face the risk that you might lose money, which can happen if the price falls and you sell for less than you paid to buy. Learn about the different types of risks inherent to bond investing.

Regulierung der Ratingagentur Europa | Liquiditätsprämientheorie der Zinssätze | Kosten für die Suche nach Rohöl | Kaufvertrag und Verkaufsvorlage |