Understanding Bonds

What is a key difference between bonds and stocks?

• Stocks are loans to corporations.

• Bonds are generally less risky than stocks.

• Stocks provide fixed interest payments.

• Bonds make you a partial owner of the issuer.

In the example of Autos Hot Dogs, what is the face value of the bond?

• $50

• $11,000

• $1,000

• $5,000

What does the yield of a bond represent?

• The maturity period of the bond.

• The face value of the bond.

• The total return an investor can expect.

• The fixed interest rate of the bond.

Which type of bonds are considered investment grade?

• Bonds graded C's and below

• Zero coupon bonds

• High yield bonds

• Bonds graded A's and B's

What should investors consider when investing in bonds?

• The popularity of the bond

• The quality of the bond and time to maturity

• Only the potential high returns

• The issuer's stock performance