Bonds

Paper Summary:

Bonds are IOUs extended from one entity to another entity as money in exchange for a loan. This paper explains that the three major types of bonds are U.S. government bonds, corporate bonds, and zero coupon bonds. Within these three major categories exist many other, major subcategories. It shows how a secure U.S. Treasury may be appropriate for one kind of investor, while a high-risk, callable corporate bond might be appropriate for another. The writer points out that most investors will seek, ideally, a diverse portfolio among a variety of these different types of securities, with varying levels of risk; a high risk gives an investor a higher yield than a low risk. The paper explains that bonds can be purchased through brokers and are traded in the open market. It concludes that the value of the bond varies according to the interest rate, although in general, government bonds are less risky than corporate bonds.

From the Paper:

"According to economist Kevin Heckinger (2002), while the average investor in these MSNBC-happy watching times may feel that he or she knows about the basics of investing in the stock market, many people remain puzzled as to what bonds are and the ins and outs of investing in various forms of fixed income securities. The average investor may have been issued a bond as a present for graduation, or received a bond as a prize in a contest, or gotten a U.S. Savings Bond as a 'reward' or incentive for buying an appliance, perhaps. But the nature of what a bond means, as opposed to a share in a publicly traded company still remains obscure in public parlance."

More papers on Bonds:

• Term Paper # 133627 : "Bonds"
• Essay # 137267 : "Illuminating the Intersections of Race, Gender and Class in Asia and Europe during the Seventeenth Century: A Review of Bitter Bonds by Leonard Blusse"
• Essay # 32838 : "Junk Bonds and LBOs"
• Essay # 74195 : "Babies, Bonds and Learned Behavior "

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