- Invest in the bond market
- Understand basic bond terminology and compare the various types of bonds
- Calculate the value of a bond and understand the factors that cause bond value to change
- Weigh the advantages and disadvantages of investing in mutual funds
Reading For This Module:
Chapter 14/15 – Keown, Arthur, “Personal Finance: Turning Money into Wealth, Prentice Hall Publishing. 6thedition
This video lectures discusses investing in the Bond market and investing in mutual funds.
How Bonds Work (video) (3:35)
This section considers the value of fixed-income securities. The section explains that investors should consider investing in bonds for the following reasons: (1) bonds reduce risk through diversification, (2) bonds produce current income, and (3) if held until maturity, bonds can be a relatively safe investment.
Corporate, U.S. government, agency, municipal, zero-coupon, and junk bond characteristics and features are reviewed. The risk-return trade-off of fixed income investing is considered. The tax advantages of municipal bonds are described, and the inverse relationship between interest rates and bond values is presented.
Dr. Waller Lecture: Bonds Investing (video) (34:44)
This video covers Bonds and Mutual Funds. Bonds are a tool companies use as an alternative to stock to raise money. Instead of selling part of the company like stock would be, they sell bonds, which is an investment of a debt owed you by the company. They are safer than stocks, riskier than bank accounts. Watch for interest rate, inflation impacts, risks, ratings and other bond terminology like par value, coupons, coupon rates, maturity and bond return calculations….
Bonds Lecture PowerPoint (.pptx 47sl, 1.1MB)
- Bonds reduce risk, produce steady income, and can be safe investment
- Hold bond until it matures—can get yield to maturity
- Value of bond is the present value of the stream of interest payments plus the present value of the repayment of the bond’s par value at maturity
- When you buy a mutual fund, you’re buying a share of a very large portfolio which goes up and down as the value of the mutual fund’s investments goes up and down