Corporate Bonds

Question: What are bonds?

what are marturity dates and face values? What are corportate bonds are there different types? what are good things about Corporate Bonds?

Answer: Value of a bond, note, mortgage, or other security as given on the certificate or instrument. Corporate Bonds are usually issued with $1,000 face values, municipal bonds with $5,000 face values, and federal government bonds with $10,000 face values. Although the bonds fluctuate in price from the time they are issued until redemption, they are redeemed at maturity at their face value, unless the issuer defaults. If the bonds are retired before maturity, bondholders normally receive a slight premium over face value. The face value is the amount on which interest payments are calculated. Thus, a 10% bond with a face value of $1,000 pays bondholders $100 per year. Face value is also referred to as Par Value or nominal value. Corporate Bonds are issued by commercial entities to raise capital. They have a broad range of risk, and so they are rated by third parties as to their credit quality. Investing in Corporate Bonds can be very conservative or very risky, depending on their rating. Big note: Corporate Bonds, unlike lower-yielding municipal bonds (and Treasurys, which aren't taxed at the state level), are fully taxable. So that means each time you receive an interest payment, you'll owe Uncle Sam a piece.

To buy into a corporate bond offering directly, you have to go through a broker and pay commission fees. But it's very difficult to know whether you're getting a fair price. You also can invest in bond funds that specialize in corporate bond issues.

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