SOME BOND BASICS
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Bonds are debt securities. They
represent money that is borrowed from investors to finance
operations and projects.
Unlike stocks, which represent shares of ownership in a company,
bonds represent money owed to their holders. When you buy a bond,
you become a lender.
Most pay fixed rates of interest. A few pay variable rates that
change with the market. Bonds are issued with a face
value or par. They also have a specified
maturity date, which is the date the issuer repays
the principal. Bonds can take from one to fifty
years to mature. Until they mature, the bond issuer makes
interest payments semi-annually, quarterly, or
Investors can buy bonds directly or as part of a mutual fund. A
bond fund buys bonds, and investors buy shares in the fund
Now that we've reviewed the basics of bonds,
let's learn what bond mutual funds are.