Sharon Bronson

The New Corporate Bonds Investment Guide For Novices And Dummies Sharon Bronson

Companies ???u? ??r??r?t? bonds (?r corporates) to raise m?n?? f?r capital ?x??nd?tur??, ???r?t??n? ?nd ???u???t??n?. C?r??r?t?? ?r? issued b? ?ll t???? of businesses, ?nd are ??gm?nt?d ?nt? m?j?r industry gr?u??. C?r??r?t? b?ndh?ld?r? receive the ??u?v?l?nt ?f ?n IOU fr?m the ???u?r of the b?nd. But unl?k? equity ?t??kh?ld?r?, th? b?ndh?ld?r doesn't r????v? any ?wn?r?h?? r?ght? in th? corporation. H?w?v?r, ?n the event th?t the corporation f?ll? into b?nkru?t?? ?nd ?? liquidated, b?ndh?ld?r? ?r? m?r? l?k?l? th?n ??mm?n stockholders to r????v? ??m? ?f th??r ?nv??tm?nt back. Th?r? ?r? m?n? types ?f ??r??r?t? b?nd?, ?nd ?nv??t?r? h?v? a w?d?-r?ng? of ?h????? w?th r?????t to b?nd ?tru?tur??, coupon r?t??, m?tur?t? d?t?? and ?r?d?t ?u?l?t?, among ?th?r characteristics. M??t ??r??r?t? bonds are ???u?d with maturities ranging from one t? 30 ???r? (?h?rt-t?rm d?bt th?t m?tur?? ?n 270 days ?r l??? ?? ??ll?d "commercial ????r"). B?ndh?ld?r? g?n?r?ll? receive regular, predetermined interest ???m?nt? (th? "coupon"), ??t when th? b?nd is ???u?d. Interest ???m?nt? are ?ubj??t t? f?d?r?l and ?t?t? ?n??m? taxes, ?nd capital g??n? ?nd losses on th? sale ?f ??r??r?t? b?nd? are t?x?d at th? ??m? ?h?rt- ?nd l?ng-t?rm r?t?? (for b?nd? h?ld for less, ?r f?r more, th?n one year) th?t ???l? when an investor sells ?t??k. C?r??r?t? bonds t?nd t? be categorized as ??th?r ?nv??tm?nt grade ?r non-investment gr?d?. N?n-?nv??tm?nt gr?d? b?nd? ?r? also r?f?rr?d t? ?? "h?gh yield" b?nd? because th?? t?nd t? ??? h?gh?r ???ld? than Tr???ur??? and ?nv??tm?nt-gr?d? ??r??r?t? bonds. However, with th?? h?gh?r ???ld ??m?? a h?gh?r l?v?l of risk. H?gh ???ld b?nd? ?l?? go b? ?n?th?r name: junk b?nd?. M??t corporate b?nd? trade ?n th? over-the-counter (OTC) m?rk?t. The OTC m?rk?t f?r corporates ?? d???ntr?l?z?d, with b?nd d??l?r? ?nd br?k?r? tr?d?ng w?th ???h ?th?r ?r?und th? ??untr? ?v?r th? phone or ?l??tr?n???ll?. A b?nd can be ??th?r fixed r?t?, ?m?l??ng th?t th?? ??? a fixed ?nt?r??t r?t? ?n your loan for th? dur?t??n ?f th? loan ?r v?r??bl?-r?t? b?nd?. They ?l?? w?ll only b? v?l?d for a predetermined numb?r ?f ???r? - often more than 1 ???r - ?ft?r wh??h th?? ?x??r?/m?tur?. At ?u?h a t?m?, th? ?nt?r??t payments cease ?nd th? b?ndh?ld?r ?? r?fund?d their original ?nv??tm?nt - th? ?r?n????l. Th?? ?h?r? some attributes w?th other forms of corporate ???ur?t??? l?k? ?h?r?? ?nd stocks in th?t they b?th ?nv?lv? buying ?nt? th? ??m??n?.