By Esme Faerber

Access the extraordinary strength of bond making an investment!

Bonds have come a ways lately. now not only a really secure and safe funding, bonds now supply the opportunity of capital appreciation as well as curiosity source of revenue. All approximately Bonds, Bond Mutual money, and Bond ETFs is the main to knowing either conventional and new varieties of bond investments.

This certain yet obtainable creation covers every little thing from easy bond features to fixed-income funding ideas. you are going to achieve a radical schooling on such issues as yield, liquidity, length, convexity, valuation, and rising markets and locate the solutions to many questions a bond investor will ask, such as:

  • What percent of my portfolio may be devoted to bonds?
  • What are the latest items and the place do i locate them?
  • What are the dangers concerned with making an investment in bonds, bond mutual money and bond ETFs?
  • How am i able to use the web to my advantage?

Whether you are excited about the bond marketplace already or approximately to go into it, All approximately Bonds, Bond Mutual cash, and Bond ETFs will consultant you even though the method of selecting the easiest bonds on your wishes, comparing their functionality, and dealing with a bond portfolio.

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Additional resources for All About Bonds, Bond Mutual Funds, and Bond ETFs

Example text

Although there is always the risk that a mutual fund could go under, the likelihood of this happening is small. The key distinction between banks and mutual funds is the manner in which mutual funds are set up, which reduces the risks of failure and loss due to fraud. Typically, mutual funds are corporations owned by shareholders. A separate management company is contracted to run the fund’s daily operations. The management company oversees the investments of the fund, but it does not have possession of the investments (assets).

These can be bought and sold in the open market. Repurchase agreements are contracts that involve the sale of money market securities with the simultaneous agreement to buy the securities back at an agreed on price in the future. Money market mutual funds invest in a diversified portfolio of short-term securities such as those described above. These short-term securities are relatively safe from default and are also fairly liquid due to the active secondary markets. Shortterm debt instruments are discussed in greater detail in Chapter 5.

When bonds are called for retirement, they no longer earn interest after the date of call. There are two methods used to determine which bonds will be retired early. One method is to draw the bonds randomly, which means that some bondholders will not be affected. One complication of the use of this method is that it becomes difficult to value the bonds from this issue, because bondholders do not know when their bonds will be called in. The second method used to determine which bonds will be called is the pro rata method.

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