Investing in Bonds : Corporate, Treasury or Municipal?
When you buy a bond, you are actually loaning your money to the organization that issued the bond. That is why bonds are often called "debt instruments." The principal (the "face value" of the bond) is repaid on the maturity date. In the meantime, you are paid a set amount of interest, usually every six months. This interest is called the "coupon" or "coupon rate." It's called that because bonds used to come with little coupons attached that you would cut off and send in twice a year to receive the interest payment. Nowadays, the coupon rate is nothing more than the annual interest rate.
Stocks and Bonds : The Differences
Stocks and bonds, like Frick and Frack and Abbot and Costello. You rarely think of one without the other. But what exactly are the differences between stocks and bonds? Actually, though they do share some core similarities, in many ways they are very different types of investments. Like stocks, bonds are sold by corporations and can be traded on the open market. Bond interest rates also fluctuate and are subject to the volatility of market conditions. But the similarities tend to end there.
