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A company or even a government entity sells a bond for a certain amount of money. At a specified date of maturity, the selling party is to pay back the initial investor the price of the bond plus interest. Not all bonds pay interest, but all bonds must pay back the principal. Buying a bond [...]

Both bonds and stocks are considered securities in the investment world. A bond is considered a debt security, which means that the issuer of the bond subsequently owes the holder of the bond a specific debt. In addition, if the terms of the bond indicate this, the issuer will be required to include interest (this [...]

Similar to the credit ratings of individuals, credit ratings are assigned to each issuer of debt obligations.  This rating affects the interest rate of the loan and also help investors categorize the many different types of debt that are issued today. Credit Rating Agencies (CRA) are companies that perform and assign these credit ratings.  For [...]

While a bond is a debt security that represents the authorized issuer’s obligation to repay the principal plus interest of the debt, a bond fund is a pool of money that invests in bonds. Most bond funds pay higher dividends than CDs or money market funds, and are considered less risky than stocks. That’s why [...]