Bonds

A bond, like an IOU, is a debt commitment. When investors purchase corporate bonds, they are effectively lending money to the firm that is issuing the bond. In exchange, the corporation agrees to pay interest on the principal and, in most situations, to repay the principal when the bond matures or comes due. Is it […]

Municipal bonds were one of the most stable fixed income asset classes in 2021, with positive returns and minimal volatility across a wide range of credit and maturity. New issuance slightly exceeded the record set in 2020, but supply was quickly absorbed by surprisingly continuous fund inflows. Record state and local revenues, stimulus spending, minimal

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

Residents of the issuing state are generally excluded from federal and state taxes on income earned from municipal bonds. While interest income is tax-free, any capital gains delivered to the investor are taxable. Are municipal bonds tax-exempt? Municipal bonds (sometimes referred to as “munis”) are fixed-income investments that offer better after-tax returns than comparable taxable

Bond price quotes are expressed as a percentage of the bond’s par value, which is transformed to a numeric number and then multiplied by 10 to calculate the cost per bond. Bond prices can be stated as fractions as well. Corporate bonds are quoted in whole or fractional amounts. Corporate bonds are valued as a

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

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”

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 themselves. The secondary market value of a bond is determined by its price and yield. How do you buy

The taxes owed on a typical corporate bond are as follows. Interest payments are usually known in terms of both the amount and the date of the payments, allowing the bond owner to determine the exact amount of interest taxes he will due. What is the tax rate on business bonds? The gains are taxed