I am trying to get a better understanding of bonds.
What are the different types of bonds and how do they differ from each other?
I am trying to understand how valuing bonds is done and how interest rate affect their value. How does this tie in with yield to date maturity?
The response was attached in a Microsoft Word document.
A bond is a debt security. The bond investor will give money to the bond issuer. In return for the money, the bond issuer will promise to pay the bond's face value on a specified date and make interest payments on specified dates for the life of the bond. There are numerous types of bonds such as: Municipal bonds, zero coupon municipal bonds, U. S. Treasury Securities, U. S. Treasury Inflation Protected Securities (TIPS), Corporate Bonds and High Yield Bonds.
Municipal bonds are debt securities that are issued by cities, counties, states and other government entities. The money collected for the bonds are used to build schools, highways, hospitals, sewer systems and a variety of other public projects. The bond issuer pays a semiannual interest payment for the life of the bond. Some municipal bonds are tax exempt for federal and state taxes.
Zero coupon bonds have three main categories: ...
The different types of bonds and valuing bonds are examined.