Bonds Investing
-
Getting a Handle on the Bond Market
While people speak of the bond market as if it were one market, in reality there is not one central place or exchange where bonds are bought and sold. Rather, the bond market is a gigantic over-the-counter market, consisting of networks of independent dealers, organized by type of security, with some overlaps.
In Brief
- Model ETF Portfolio: Beats Benchmark, But Total Recovery Not Yet Complete
- After the Storm, Stability Returns to the Model Mutual Fund Portfolio
- Rebound: Model Shadow Stock Portfolio Strongly Up, But Still Playing Catch-Up
- Model Shadow Stock Portfolio Up 66%, as Market Move Mystifies Pundits
- Keeping Fund Portfolio Unchanged Despite Tough Start to 2010
Bond Investing Know-How
Why Bond Prices Go Up and Down
With bond investing, prices go up and down in response to two factors: changes in interest rates and changes in credit quality. Bond investors tend to worry a lot about the safety of their money. Generally, however, they tie safety to credit considerations. Many bond investors do not fully understand how changes in interest rates affect price. Since the late 1970s, changes in the interest rate environment have become the greatest single determinant of return on bond investments. Managing interest rate risk has become the most critical variable in the management of bond portfolios. In this article, we'll see why.
Interest Rate Risk
"Interest rate risk," also known as "market risk," refers to the propensity bonds have of fluctuating in price as a result of changes in interest rates.
All bonds are subject to interest rate risk.
Archives »
Build America Bonds
Build America Bonds (BABs) are new taxable municipal bonds that were authorized in February under the American Recovery and Reinvestment Act of 2009.
These new bonds allow state and local governments to issue taxable bonds in 2009 and 2010 for government capital projects; the issuers receive a direct subsidy payment from the U.S. Treasury for a portion of their borrowing costs.
Bonds Articles
- I Savings Bonds
- Munis vs. Taxables: How to Determine the Taxable Equivalent Yield
- Laddered Bond Portfolios
- Where Credit Is Due: A Look at the Ratings
- Convertible Bonds
- How to Buy Individual Bonds: A Fixed-Income Toolkit
- Turmoil in the Marketplace: What's Going on With Municipals?
- Offbeat Offerings: Mortgage-Backed Securities
- Offbeat Offerings: Credit Union CDs
