Top Things to Know About Bonds Before You Invest

What are bonds essentially described as in financial terms?

• Formal IOUs

• Equity shares

• Real estate properties

• Commodity trades

Which entities are known to issue bonds?

• Individual entrepreneurs

• Only non-profit organizations

• Only private corporations

• Public and private corporations, and government bodies

What is the relationship between bond prices and interest rates?

• Bond prices decrease as stock prices increase

• Bond prices are independent of interest rates

• Bond prices fall when interest rates rise

• Bond prices rise when interest rates rise

What type of bonds are known for being very safe?

• International bonds

• Junk bonds

• Corporate bonds

• Federal government bonds

What does YTM stand for in bond investing?

• Year-to-Month

• Yield Tracking Mechanism

• Yield to Maturity

• Yearly Total Margin

What are municipal bonds primarily issued for?

• Funding public projects like schools and highways

• Stock market investments

• Corporate expansions

• Personal loans

What is a key feature of bond mutual funds?

• Professionally managed and safe

• High risk and high return

• Managed by AI

• Only invests in international bonds

What are 'junk bonds'?

• High-risk bonds

• Bonds issued by junkyards

• Government-issued bonds

• Bonds with guaranteed returns

What financial tool is used to protect against default risk in bonds?

• Futures contracts

• Equity options

• Interest rate swaps

• Credit default swaps

What does a yield curve in bond investing represent?

• The annual return on investment

• The default risk of corporate bonds

• The correlation between bond prices and stock prices

• The relationship between interest rate and bond maturity