Bonds_2.10.key - Bonds Chapter 14 in text Types Treasuries...

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Bonds - Chapter 14 in text • Types – Treasuries • Fed agencies – Municipals (state or local) – Corporate • Risk and Ratings • Special Characteristics • Why bonds? • Bond mistakes • So what is so complex? Two ways to make money. .. 1. Earn it. ... Wages interest dividends capital gains 2. Loan it. ...BONDS Terms • Purchase: • Interest: • Due Date: • Before Due Date: Savings Bonds EE I Purchase Interest Tax Notes: (more info @ savingsbond.gov) Bonds Type: Length of Time • Treasuries – Bill – Note – Bond – Agency • Municipals • Corporate Time Length Tax treatment A. Reward! $1,000 @ 5.2% = $52. B. RISK…. 1. Taxes $52. X .15 = $7.80 ~ $8.00 2. Inflation $1,000 x .03 = $30. $52.00 - $38.00 = $14.00
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Risk Yield Low ___________________________High Bond Ratings • Moody’s Aaa Aa A Baa Ba • Standard and Poors AAA AA A BBB BB B Cumulative Default Rates by Rating Categories (1970 - 2001) 0 20 40 60 80 Aaa Aa A Baa Ba B Caa - C Year 5 I Clicker • Which bond holds the most risk for the
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This note was uploaded on 03/24/2010 for the course FCE 238 taught by Professor Boyce during the Spring '07 term at Michigan State University.

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Bonds_2.10.key - Bonds Chapter 14 in text Types Treasuries...

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