PRINCIPAL

3 COMPONENTS OF BONDS

• Coupon Rate - the interest rate the bond issuer will pay to the bondholder
• Maturity - time at which payment to the bond holder is due.
• Par Value - investor pays to purchase a bond and that will be repaid to-
• the investor at maturity

TYPES OF BONDS

• Saving Bonds - lowing denomination bonds issued by U.S. Gov't
• Municipal - issue bonds to finance improvements like highway,state buildings etc.
• Corporate bonds - issued in large denominations($1000, 5000,10,000)
• Junk Bonds - low rated and potentially higher-paying bonds

FINANCIAL ASSET MARKETS

• Capital Market -money is lent for periods longer than a year
• Money Market -money is lent for periods less than a year
• Primary Market - assets that can be redeemed only by the original holder
• Secondary Market - financial assets that can be resold are sold

YIELD

• Annual rate of return on the bond were held to maturity.

SEC

• Securities and Exchange Commisson-
• Independent Gov't agency that regulates financial markets and-
• invest companies