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Since bond funds hold a variety of bonds with different maturities, the price changes of individual bonds within the fund can offset each other. This helps to reduce the overall volatility of the ...
Debt service funds are used to account for money that will be used to pay the interest and principal of long-term debts. Bonds used by a government to finance major construction projects, to be paid by tax levies over a period of years, require a debt service fund (sometimes titled as "interest and sinking fund") to account for their repayment.
In finance, a bond is a type of security under which the issuer owes the holder a debt, and is obliged – depending on the terms – to provide cash flow to the creditor (e.g. repay the principal (i.e. amount borrowed) of the bond at the maturity date and interest (called the coupon) over a specified amount of time. [1])
Bonds can be useful for diversification if you’re interested in adding more stability and safety to your investment portfolio. But does it make sense to invest in bond funds, whether mutual or ...
An important property of bond funds is the rating of the bonds they own. Funds may be rated from high to low credit quality. The quality of a fund is the average of the bonds owned by the fund. Funds that pay higher yields typically own lower quality bonds. Like stocks, the price of high-yield bonds is subject to fashion. [3] [4] For example ...
Bond funds can be a good choice if you want a complete bond portfolio in a single investment, or if you don’t have the time or knowledge to pick individual bonds on your own. They can also be a ...
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