Bonds And The Bond Market

Given today's uncertain economy, many people are taking time to examine various options for their financial future. Different types of investments are investigated and bonds can be one of the more popular choices considered. Many of the same people who talk about investing in bonds, however, do not fully understand them nor where they place in the economy. Many individuals believe that they should simply buy a bond and wait until it matures before cashing it in. These people fail to realize that they may be losing a lot of money due to the fluctuation of bond prices. At some point it may be more profitable to sell their bond than to keep it until the payment date is reached.
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original investment is returned to them.
There are many reasons why people invest in bonds. For example, if one chooses a stable and profitable bond, it will provide a steady source of income through interest payments during the lifetime of the bond. As well, the risk when investing in a bond is considerably less than for most other forms of investment. The bond does not, for instance, experience the volatility of a stock on the stock market, like many other forms of investment do. Also, in instances where the issuer fails to pay the principal amount back to the bond holder, legal recourse is available. Furthermore, in cases of bankruptcy within large corporations with stock holders, bond holders take priority and are guaranteed payment before stockholders.
During the past forty five years, bonds have experienced their ups and downs. However, the return rate on bonds has surpassed the inflation rate. Bonds have averaged an interest rate of over six and a half percent, ...

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means to them. As with mutual funds and other forms of financial investment, there are many different types of bonds available on the market. Each individual, when considering bonds, must decide which of type of bond is best suited to him or her. Some bonds provide a stable income from interest earned and must be kept in the form of a bond until maturity, while others give the bearer an option of whether or not he or she would like to 'trade' the bonds in for common stock.
Canada Savings Bonds are labeled as "government bonds", however, in comparison to regular bonds, their characteristics differ. One advantage of Canada Savings Bonds is that, unlike most bonds on the market, ...

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Bonds And The Bond Market. (2004, October 20). Retrieved March 20, 2019, from
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"Bonds And The Bond Market." October 20, 2004. Accessed March 20, 2019.
"Bonds And The Bond Market." October 20, 2004. Accessed March 20, 2019.
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Added: 10/20/2004 09:26:35 AM
Category: Economics
Type: Premium Paper
Words: 2635
Pages: 10

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