Investing
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Snapshot of a Stock: The Balance Sheet
Successful investing has no secret formula. Since financial statements are basic tools of fundamental analysis, it is important to be able to read and analyze them.
Investing Know-How
How Interest Rate Changes Affect the Price of Bonds
Whether the interest rate movements are caused by Federal Reserve actions, economic conditions or inflation fears, the impact on the bond investor is the same: Rising interest rates reduce existing bond values and falling interest rates increase existing bond values.
Seems simple enough.
But how will your bond investments be affected by changes in interest rates?
Since bonds differ by maturity, coupon rate, type of issuer and other factors, figuring out how your bond or bond portfolio will be affected by interest rate changes can be complex. Fortunately, you don't need a math degree to understand the basic concepts. Here are some simple guidelines for judging the price volatility of your bonds.
What Affects Bond Price Volatility
The price that a bond sells for in the market today is the sum of all future cash flows, discounted in value because they are not available today. A dollar tomorrow is worth less to you than a dollar today. The discount rate used is the rate of interest prevailing in the...
Archives »
Where Credit Is Due: A Look at the Ratings
There are many factors that individuals must consider when making investments in fixed-income securities. Current bond yields, current bond prices, and current as well as future interest rates all may have a big impact on the return of a fixed-income investment.
One other factor investors need to evaluate is the credit quality of the issuer and the particular bond. Individuals investing in fixed-income securities typically have two major...
Investing Articles
- Why Technical Analysis Matters
- Top Charting Web Sites
- State-Based Exchange-Traded Funds
- Donor-Advised Charitable Mutual Funds
- I Savings Bonds
- Munis vs. Taxables: How to Determine the Taxable Equivalent Yield
- Taking Aim at Your Retirement: A Look at Target Date Mutual Funds
- Laddered Bond Portfolios
- The Dividend Puzzle: The Relationship Between Payout Rates and Growth
- Don't Fight the Fed: Interest Rates and their Impact on the Stock Market
- How to Set and Revise Realistic Price Targets for Your Stocks
- Life Cycle Funds
