Bonds-corporate. Unlike a stock, a bond is evidence not of ownership, but of a loan to a company or to a government, or to some other organization. It is a debt obligation.
When you buy a corporate bond, you have bought a portion of a large loan, and your rights are those of a lender. You are entitled to interest payments at a specified rate, and to repayment of the full face amount of the bond on a specified date. The fixed interest payments are usually made semiannually.
The quality of a corporate bond depends on the financial strength of the issuing corporation. Bonds are usually issued in units of 1,000 or 5,000, but bond prices are quoted on the basis of 100 as par value. A bond price of 96 means that a bond of 1,000 face value is actually selling at 960 And so on. Many corporate bonds are traded on the NYSE, and newspapers carry a separate daily table showing bond trading. The major trading in corporate bonds, however, takes place in large blocks of 100,000 or more traded off the Exchange by brokers and dealers acting for their own account or for institutions. 4.2 Bonds-U. S. GovernmentU.S. Treasury bonds long-term, notes intermediate-term and bills short-term, as well as obligations of the various U. S. government agencies, are traded away from the exchanges in a vast professional market where the basic unit of trading is often 1 million face value in amount. However, trades are also done in smaller amounts, and you can buy Treasuries in lots of 5,000 or 10,000 through a regular broker.
U. S. government bonds are regarded as providing investors with the ultimate in safety. 4.3