Bonds

What Is the Difference Between Bonds & Equity in a Stock Portfolio?

What Is the Difference Between Bonds & Equity in a Stock Portfolio?

Financial planning experts recommend that an investment portfolio balance holdings among stocks, bonds and cash. The stock holdings are the equity portion of a portfolio. Bonds ...

How to Calculate a Bond Buy Back

How to Calculate a Bond Buy Back

Callable bonds allow issuing companies to buy back a bond before maturity, usually at a premium of the face value. The company may opt to buy back bonds when interest rates fall, ...

How to Amortize a Bond Premium Using the Straight Line Method

How to Amortize a Bond Premium Using the Straight Line Method

If a bond is purchased at a price higher that the face amount, a premium has been paid. For example, if an investor pays $110,000 for a $100,000 bond, he has paid a premium. An ...

What Happens When Bonds Drop?

What Happens When Bonds Drop?

Bonds in the secondary market can trade for more or less than their face value -- the contractual amount to be repaid at maturity. Bond prices may drop for several reasons ...

How to Calculate Unbiased Expectations Theory

How to Calculate Unbiased Expectations Theory

Unbiased expectations theory predicts future short-term interest rates based on the assumption that long-term interest rates are indicators for the future. This calculation ...

Liquidity Premium Theory of Interest Rates

Liquidity Premium Theory of Interest Rates

The liquidity premium theory (LTP) is an aspect of both the expectancy theory (ET) and the segmented markets theory (SMT). In fact, LPT is a synthesis of both ideas on bonds, ...

Bond Quotes Explained

Bond Quotes Explained

Bond quotes may differ in format, but they all contain essentially the same information: the bond issuer, the coupon rate, the maturity date, the yield and the current price. ...

The Average Rate of Return of a Bond

The Average Rate of Return of a Bond

While many novice investors understand the basics of the stock market, many have an understanding of the bond market that’s hazy at best. It’s understandable, as bond ...

Advantages & Disadvantages to Issuing Bonds in Order to Raise Capital

Advantages & Disadvantages to Issuing Bonds in Order to Raise Capital

Companies that need money for projects or general operations have the option of offering bonds to the public. The bonds are like IOUs for a large number of small loans, which the ...

Common Stock Vs. Preferred Stock Vs. Bonds

Common Stock Vs. Preferred Stock Vs. Bonds

Dividend paying common stocks, preferred stock shares and bonds each offer income-seeking investors various advantages and pitfalls. For the knowledgeable investor, selecting ...

What Is the Yield to Maturity and Yield to Call?

What Is the Yield to Maturity and Yield to Call?

A callable bond is a financial instrument that gives the issuer the right to call in its bonds for redemption before they reach maturity. This does not mean that the issuer will ...

Advantages & Disadvantages of Buying Bonds

Advantages & Disadvantages of Buying Bonds

Companies, governments and government agencies issue bonds to raise money for necessary projects. When the bond matures, the issuer pays you back in full, and typically pays ...

How Much Money Do You Need to Invest in Individual Bonds?

How Much Money Do You Need to Invest in Individual Bonds?

The amount of money you need to invest in individual bonds depends on bonds' minimum prices, as well as your risk tolerance level, tax bracket and goals. You can start with as ...

The Characteristics of Domestic Bonds

The Characteristics of Domestic Bonds

All bonds are basically the same. They represent loans to the issuer of the bond and have specific qualities that are outlined in the prospectus for each issue. They are similar ...

Tax Exempt Securities Vs. Municipal Bonds

Tax Exempt Securities Vs. Municipal Bonds

Tax-exempt securities and municipal bonds are not opposing terms. Municipal bonds are a type of tax-exempt security, and the terms are sometimes used interchangeably. Municipal ...

The Procedures for the Eurobond Issuance Process

The Procedures for the Eurobond Issuance Process

A eurobond is a bond issued in a particular currency, such as euros or dollars, and sold to investors in markets other than the one using the currency of the bond issue. For ...

How to Calculate Semi-Annual Bond Yield

How to Calculate Semi-Annual Bond Yield

Bonds are generally long-term investment vehicles. They take several years to mature, and they earn interest during each year the investor holds onto them. Many bonds pay interest ...