Bonds and Mutal Funds Personal Finance

bonds that are issued by financially stable companies or municipalities

Investment grade bonds

a mutual fund with a fixed number of shares that are issued by an investment company when the fund is first organized

closed-end fund

Amount that one share of a mutual fund is worth

Net Asset Value

a mutual fund with an unlimited number of shares that are issued and redeemed by an investment company at the investor's request

Open-end fund

the annual rate of return on a bond if the bond were held to maturity

Yield

a type of debt security that is issued by a company and sold to investors. The company gets the capital it needs and in return the investor is paid a pre-established number of interest payments at either a fixed or variable interest rate.

Corporate Bonds

Failure to pay back a loan

Default

A type of investment that pays interest on a set schedule. These investments include corporate, municipal, agency, and U.S. Treasury bonds.

Fixed-income investments

bonds with low credit quality that offer a high yield to maturity, also called junk bonds

high-yield bonds

An entity which issues and is obligated to pay principal and interest on a debt security.

Issuer

the difference between the face value and the bond price, expressed as a percentage of the bond price. (also referred to as the coupon rate)

interest rate of bond

Time at which payment to a bondholder is due

Maturity

the VALUE of a bond at its maturity; what the issuer promises to pay the bondholder when the bond matures

per value

The UNSCHEDULED partial or complete PAYMENT of the principal amount outstanding on a mortgage or other debt before it is due.

Pre-payment

the face value of a BOND (also referred to as face or par value)

principal of a bond

The DATE when the purchase or sale of a bond is transacted.

Trade date

A financial security that represents a promise to repay a fixed amount of funds

Bond

bundle of stocks or bonds that are in an index that tracks the overall movement of a market, but unlike a mutual fund can be traded like a stock

Exchange Traded Fund (ETF)

A FUND that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets

Mutual Funds