Be introduced to the definition of bonds, their advantages and disadvantages, their risks versus reward characteristics, and their historical returns
Explore the inverse relationship of interest rates and bond prices, a relationship that causes much confusion to many individuals in and out of the industry
Examine various characteristics of bonds including maturity date, par value (aka face value), call provisions, bond quotes, and the principles of bond price behavior
Review the various types of bonds from the least riskiest (Treasury bonds) to the most riskiest (non-investment grade, aka junk bonds)
Explore the methods by which bonds are rated on the basis of their probability of default
By the end of this module, you should be able to
Describe the various components, characteristics, benefits, advantages, and disadvantages of bonds and bond investing
Explain the inverse relationship of bond prices and interest rates and how a bond could be selling at a premium or a discount to its par value (aka face value)
Outline the major bond types and their risk/return profiles
Identify and explain the method by which bonds are rated on the basis of their probability of default