When it comes to investing, bonds are a popular choice for many individuals and institutions. They offer a predictable stream of income and are considered relatively safer compared to other investment options. But before jumping into the world of bond investments, it’s crucial to understand the ...
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his ...
A bond is essentially a loan an investor makes to the bonds' issuer. That issuer can be the government in the form of municipal bonds, companies in the form of corporate bonds, or even international organizations.
Understand that interest is not paid by some bonds. These are considered zero-coupon bonds. However, you purchase the Bond at less than its face value rather than paying interest. So, for a zero coupon bond of $5,000, you would pay $4,600. You receive $5,000 back when the Bond mat...
Bonds are often considered a safe way to park money, collect interest and cash in at maturity. That is true of investment grade bonds, but not all bonds get that coveted rating. Ratings agencies do a thorough analysis and grade bonds according to their risk, including likelihood of default....
the lower the yield. if the rating is low—"below investment grade"—the bond may have a high yield but it will also have a risk level more like a stock. on the other hand, if the bond's rating is very high, you can be relatively certain you'll receive the promised payments...
A debt investment is a financial opportunity that involves the acquisition of bond issues as a means of investing in a company...
Prepayment risk is considered bad news. It is the risk that a given bond issue will be paid off earlier than expected. This is usually done through a call provision. This risk happens when the company only has an incentive to repay earlier when interest rates have declined. Hence, investors...
Investment grade is a measure of a company's credit. Higher rated companies are considered investment grade, suggesting strong underlying fundamentals and a good capacity to pay a bond's principal and interest. Issues that are investment grade are rated as "BBB" or "Baa" or higher by ratings ...
An investment grade is a rating that signifies a municipal or corporate bond presents a relatively low risk ofdefault.Bond ratingfirms like Standard & Poor’s (S&P), Moody's, and Fitch use different designations, consisting of the upper- and lower-case letters "A" and "B," to identify a...