The Money Farm Team

Bond mutual funds typically generate consistent income from a diverse portfolio of securities. As a result, the income tax rate is determined by the securities held by the fund. Furthermore, because fund managers buy and sell bonds on a regular basis, there may be capital gains and losses. Bond funds distribute interest and capital gains […]

Bonds have a fixed face value and trade at par when the current price matches the face value. When the current price of a bond is more than the face value, it is called a premium. A $1,000 face value bond selling for $1,200, for example, is trading at a premium. Discount bonds, on the

A bond rating is a letter grade assigned by a rating agency to a bond that indicates its credit status. A bond issuer’s financial health, or capacity to pay the bond’s principal and interest on time, is factored into the rating. How do bonds get their ratings? Bond ratings are assigned letters ranging from “AAA”

The nominal yield spread between a high-yield bond and a specified on-the-run U.S. Treasury bond is commonly used to price high-yield bonds. When a high-yield bond’s credit rating and outlook deteriorate, however, the bond may begin to trade at an actual dollar price. For example, a bond like this sells for $75.875, which is 500

Municipal issuers’ financial status may be less transparent than that of public businesses. Municipal bonds may have a less liquid market than taxable bonds. Some investors may have to pay federal or state income taxes, as well as the Alternative Minimum Tax (AMT). If there are any capital gains distributions, they are taxed. Is now

Municipal bonds are worth considering if your primary investing goal is to protect capital while receiving a tax-free income stream. Municipal bonds (also known as munis) are debt obligations issued by government agencies. When you purchase a municipal bond, you are essentially lending money to the issuer in exchange for a specified number of interest

After they are issued, bonds can be bought and sold in the “secondary market.” While some bonds are traded on exchanges, the majority are exchanged over-the-counter between huge broker-dealers operating on behalf of their clients or on their own. As a result, the yield is calculated using both the bond’s purchase price and the coupon.

A corporate bond is taxed in three ways: first, on interest earned on the bond, then on capital gains or losses made on the bond’s early sale, and third, on the initial issue discount. Is it true that corporate bonds are tax-free? While interest on government bonds is normally excluded from state and local income

Stocks provide ownership of a company as well as a share of any cash dividends (‘Dividends’). Bonds allow you to participate in lending to a business but do not give you ownership. Instead, the buyer of a Bond receives periodic payments of Interest and Principal. What’s the difference between stocks and corporate bonds? Stocks and

Companies ranging from major institutions with varied amounts of debt to small, highly leveraged start-up enterprises issue corporate bonds. The risk profile of corporate and government bonds is the most significant distinction. Because corporate bonds have a higher credit risk than government bonds, they often have a higher yield. However, as we have seen more