"Investment-grade bond funds" is a broad term that encompasses funds that invest in high-quality bonds that have been rated "investment grade" by the bond ratings agencies. (Read more about Bond ratings.) These high-quality bonds include those issued by the U.S. Treasury and other government...
But you can also invest in bonds through bond funds. Bonds are sold through funds, just the way stocks are. Each is a portfolio of bonds held in a single investment unit. The fund may hold hundreds of different bond issues and will be run by an investment manager. It’s important to ...
bond is the amount that an investor pays to acquire it. This price is typically based on the bond’s market value and can be higher or lower than the bond’s face value. It is crucial to consider the purchase price as it will determine the initial investment and future potential returns...
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...
The interest rate is determined by the size of the coupon and the price of the bond at purchase. If it is held to maturity, it also represents the rate of return on the investment.Investment bonds are categorized based on their credit quality. High-quality investment-grade bonds, such as ...
AAA bonds belong to a broader category of bonds known as "investment-grade" bonds. Investment-grade bonds include any bond that is rated at or above BBB- (on the S&P and Fitch scale) or Baa3 (on the Moody's scale).5This has important regulatory implications. For example, abank trust ...
If the Bond is callable, when is its call date? Are there potential taxation implications? What’s the price of the call? How does it compare with its present price? For your investment objectives, what does that mean? 5.Some bonds don’t pay interest ...
For reference, investment-grade bonds are the least likely to default and have a credit rating of BBB or above (Standard and Poor’s) or Baa and above (Moody’s). Conversely, bonds below this threshold fall into the high-yield bond — otherwise known as junk bond — territory. ...
What Is an Investment Grade Bond? An investment-grade bond is a so-called high-quality or low-risk bond. It is considered to be a fairly safe bet and has a very low rate of default. Bonds rated "AAA," "AA," "A," and "BBB" are considered investment grade.1 The Bottom Line A b...
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...