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Corporate bonds offer many risks and rewards. Investors looking to buy individual bonds should understand the advantages and disadvantages of bonds, relative to other alternatives. Advantages of ...
Types of bonds more likely to be affected by interest rate risk: Long-term government bonds, corporate bonds, mortgage-backed securities, muni bonds and zero-coupon bonds. 3. Reinvestment risk
That means bonds are usually part of a long-term investment strategy, such as having stable income in retirement. Once you determine your goals, decide what you want your asset allocation to be.
This risk depends on the particular corporation issuing the bond, the current market conditions and governments to which the bond issuer is being compared and the rating of the company. Corporate bond holders are compensated for this risk by receiving a higher yield than government bonds.
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])
State and local governments issue municipal bonds to finance projects or other major spending initiatives. Debt issued by government-backed agencies is called an agency bond. Companies can issue a corporate bond or obtain money from a bank through a corporate loan. Preferred stocks share some of the characteristics of fixed interest bonds.
Corporate bonds, which are a type of debt security, function as a tool for corporations to raise capital. A high-yield corporate bond offers higher interest rates than a typical corporate bond ...
An equity issuance or equity issue is the sale of new equity or capital stock by a firm to investors. [1] Equity issuance can involve a private sale, in which the transaction between investors and the firm takes place directly, or publicly, in which case the firm has to register the securities with the authorities and the sale takes place in an organized market, open to any registered investor ...