BONDS

[ HOME ] [ WISEBEAVER.COM ] [ MUTUAL FUNDS ] [ ROTH IRA ] [ VOLATILE MARKETS ] [ STOCKS ] [ 403B ] [ 401A ] [ 401K ] [ 457 ] [ IRA ] [ MRD ] [ ROLLOVERS ] [ DISTRIBUTIONS ] [ TRANSFERS ] [ MEA ] [ FEDERAL RESERVE ] [ MARKET INDICES ] [ ECONOMIC INDICATORS ] [ DOW ] [ INTERNATIONAL MARKETS ] [ GOLD ] [ COMPUTERS ] [ ERISA ] [ BROKERAGE ] [ BONDS ] [ NASD SERIES 7 EXAM ]

THE EVOLUTION OF BONDS AND BOND MUTUAL FUNDS

BONDS
Every bond issue has a life, this is called the term of the bond. Bonds are issued "short term," (usually a year of less) "intermediate term," (about two years) and "long term," (over 30 years).

US Treasuries what are they and what are they used for

TAXATION OF US TREASURIES
The income from Treasury Bills, Treasury Notes, and Treasury Bonds are exempt from local and state income tax. However, the income from treasuries are not exempt from Federal taxes.

TREASURY BILLS-short maturity less than one year, sold at a discount
These bonds are sold at auction at any Federal Reserve Bank. T-bills are short term instruments, sold at a discount investments. They mature in less than one year. Many bills mature in 13 to 26 weeks (three to six months). Denominations are sold in amounts of 10,000 to $1,000,000 at weekley and monthly bidding auctions. Some Treasury Bills are also offered for sale every monday.

These bills are auctioned every monday so that investors can buy new issues at almost any time.

TREASURY NOTES-Intermediate length maturing in 1 to 10 years sold
These bonds are sold at auction at any Federal Reserve Bank. The notes are sold in denominations from $10,000 to $1,000,000, and are sold by subscription.

TREASURY BONDS-Long maturity over 10 years, sold at deep dicount.
These bonds are offered for the purpose of helping the government pay various government activities, and to pay off the national debt. These are long term instruments with maturities over 10 years. They are sold in denominations of $1,000. They are sold quarterly and are announced in advance.

SERIES EE BONDS
These bonds are sold are 50% of their face value. One unknown fact of these bonds is that they can be redeemed before maturity. In the early years of these bonds, only small amounts of interest accrue. However, in the later years significantly more interest is accrued. Although these bonds can be redeemed before maturity low returns in especially the early years is a significant incentive to hold such bonds to maturity. The tax on the annual tax of an EE bond can be paid yearly or derered until the bond matures.

SERIES HH BONDS
These bonds pay interest semi-annually. These bonds can only be purchased by owning a and trading series EE Bonds at maturity. These bonds mature in 10 years. An investor can redeem these bonds at any time for face value.

VARIOUS OTHER TYPES OF BONDS

CORPORATE BONDS
Corporate bonds are utilized for the purpose of raising capital for corporations. The money is used typically used for items such as expansion, modernization, operating expenses, and corporate take overs. Corporate bonds are sold at par or face value.

MUNICIPAL BONDS
State, city, town, county, and special district bonds. These bonds pay for various public projects such as: schools, highways, sewage systems, parks, and other public projects.

ZERO COUPON BONDS
This bond pays out no interest while the loan on the bond matures. Instead the interest is paid out in a lump sum at the date of maturity. Zero Coupon in essence means Zero intrest.

CONVERTIBLE BONDS
These bonds provide investors with the opportunity to convert their corporate bonds to into company stock. Investors do this instead of recieving cash fof the bond. The terms of convertible bonds are set at the time it is issued. The terms of the bond include the date at which a conversion to company stock can be made. The terms also specify the amount of stock will be recieved in relation to the bonds owned. Convertible bonds typically have lower returns.

STRONG>MORTGAGE BACKED BONDS
These bonds are sold by the government, brokers, and corporations. These type of bonds are backed by a pool of mortgage loans. One of the unique features of this type of bond is that they are self-amoritizing. This means that when an investor recieves a payment over the life of the bond they recieve both principal and interest instead of a lump sum repayment at maturity.

BOND MUTUAL FUNDS

Some bond funds contain stocks and bonds and various other investment instruments. The average maturity date of a bond fund is an important factor to consider when shopping for a fund. Some funds have average maturity dates as low as one year. Others have average maturity dates as high has 9 years.

In association with AMAZON.COM. Click for books

Bean Gifts Belly Lint Health Guide Bridal Registry Dachshun Stories About One Eye Man Leaves for Sale
On sale items Affiliates Corporate Info Attorney Services Privacy Contact Us