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Types of Bonds

“Think of bonds as you would a loan. Your brother-in-law may not be very good at paying back loans, so if you were going to lend him $10,000 for five years, you’d ask him to pay more interest than if he had a great repayment history.”

- Lorayne Fiorillo, author of
Financial Fitness in 45 Days

Bonds vary according to issuer, maturity, and credit quality. Issuers may vary from state or local governments to public companies, maturity dates range from 1 to 10 years, and credit quality spans the gamut from U.S. government guarantees to what’s called “junk bonds”--those with lower credit ratings.

The key attribute of bonds is income which is usually paid semi-annually. While bond prices can fluctuate from day to day, the income stream they provide may be very attractive for long-term investors. Bond prices typically move in the opposite direction of interest rates; therefore when interest rates rise, bond prices drop. And vice versa.

The following links are designed to help familiarize you with the various types of bonds available in today’s market.

U.S. Government Securities
Mortgage-Backed Securities
Municipal Bonds
Corporate Bonds
Junk Bonds

 What is a Bond?

 Types of Bonds

 

 Bond Terminology

 

 Costs Associated with Bonds

 

 Tax Issues

 

 

 

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