From the course: Financial Basics Everyone Should Know
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How bonds work
- [Instructor] If you think stocks are too risky then bonds are often a good alternative. When you are stockholder, you're a true owner of the firm. Owners of bonds, on the other hand, are debtholders or creditors. A bond is a type of debt or a long-term promissory note, issued by a borrower, promising its holder a predetermined and fixed amount of interest per year and then repayment of the principal at maturity. Essentially, if you own a bond, you know exactly how much the company has promised to pay you each year plus they've promised to give you all of your original investment back when the bond comes due in the future. Bonds are issued by corporations, by the US government, by state and local municipalities, and a variety of our other organizations. There are five major features of a bond that investors like you need to pay attention to when evaluating that bond. The first is par value. Par value is the face value of the bond. It's what's returned to bondholders at maturity. In…
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Contents
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The stock market4m 40s
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(Locked)
Determining when to adjust assets3m 12s
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Determining the value of a stock4m
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(Locked)
Setting up a brokerage account4m 23s
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Investing with mutual funds4m 5s
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Investing with ETFs4m 21s
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How bonds work4m 42s
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Diversifying your portfolio3m 18s
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