All About Bonds, Bond Mutual Funds & Bond - Trading Software

338 Pages·2008·4.48 MB·English

FFOORR SSAALLEE && EEXXCCHHAANNGGEE

wwwwww..ttrraaddiinngg--ssooffttwwaarree--ccoolllleeccttiioonn..ccoomm

MMiirrrroorrss::

wwwwww..ffoorreexx--wwaarreezz..ccoomm

wwwwww..ttrraaddeerrss--ssooffttwwaarree..ccoomm

wwwwww..ttrraaddiinngg--ssooffttwwaarree--ddoowwnnllooaadd..ccoomm

JJooiinn MMyy MMaaiilliinngg LLiisstt
ALL ABOUT BONDS,
BOND MUTUAL FUNDS,
AND BOND ETFs
O T H E R T I T L E S I N T H E
“A L L A B O U T. . .” S E R I E S
All About Stock Market Strategies
by David Brown and Kassandra Bentley
All About Technical Analysis
by Constance Brown
All About Derivatives
by Michael Durbin
All About Investing
by Esmé Faerber
All About Asset Allocation
by Richard A. Ferri
All About Index Funds
by Richard A. Ferri
All About Hedge Funds
by Robert A. Jaeger
All About Market Timing
by Les Masonson
All About Options, 3rd edition
by Thomas A. McCafferty
All About Dividend Investing
by Don Schreiber and Gary E. Stroik
All About Commodities
by Russell R. Wasendorf
All About Futures
by Russell R. Wasendorf
All About Stocks, 3rd edition
by Esmé Faerber
All About Exchange Traded Funds
by Archie Richards, Jr.
This page intentionally left blank
ALL ABOUT BONDS,
BOND MUTUAL FUNDS,
AND BOND ETFs
Third Edition
ESME´ FAERBER
New York Chicago San Francisco Lisbon London
Madrid Mexico City Milan New Delhi San Juan
Seoul Singapore Sydney Toronto
Copyright © 2009 by Esmé Faerber. All rights reserved. Except as permitted under the United States
Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by
any means, or stored in a database or retrieval system, without the prior written permission of the
publisher.
ISBN: 978-0-07-154428-3
MHID: 0-07-154428-3
The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-154427-6,
MHID: 0-07-154427-5.
All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after
every occurrence of a trademarked name, we use names in an editorial fashion only, and to the
benefit of the trademark owner, with no intention of infringement of the trademark. Where such
designations appear in this book, they have been printed with initial caps.
McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales
promotions, or for use in corporate training programs. To contact a representative please visit the
Contact Us page at www.mhprofessional.com.
This publication is designed to provide accurate and authoritative information in regard to the subject
matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal,
accounting or other professional service. If legal advice or other expert assistance is required, the serv-
ices of a competent professional person should be sought.
—From a Declaration of Principles Jointly Adopted by a Committee of the American Bar Association
and a Committee of Publishers and Associations
All investing concepts, ideas, strategies, methods, etc. in this book are intended for educational
purposes only. They are not meant to recommend or promote any investing strategy or philosophy. You
are advised to consult a financial professional before investing.
TERMS OF USE
This is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors
reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted
under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not
decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon,
transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without
McGraw-Hill’s prior consent. You may use the work for your own noncommercial and personal use;
any other use of the work is strictly prohibited. Your right to use the work may be terminated if you
fail to comply with these terms.
THE WORK IS PROVIDED “AS IS.” McGRAW-HILL AND ITS LICENSORS MAKE NO GUAR-
ANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF
OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMA-
TION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE,
AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the
functions contained in the work will meet your requirements or that its operation will be uninterrupt-
ed or error free. Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any
inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting therefrom.
McGraw-Hill has no responsibility for the content of any information accessed through the work.
Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental,
special, punitive, consequential or similar damages that result from the use of or inability to use the
work, even if any of them has been advised of the possibility of such damages. This limitation of
liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract,
tort or otherwise.
C O N T E N T S
Preface ix
Acknowledgments ix
Chapter 1
What Bonds Can Do for You and Why You Should Consider
Investing in Them 1
Chapter 2
Characteristics of Bonds 17
Chapter 3
Risks of Bonds 31
Chapter 4
Yield and Price 41
Chapter 5
Duration and Convexity 55
Chapter 6
The Economy and the Bond Markets 67
Chapter 7
Money Market Securities 91
Chapter 8
Treasury Securities 113
Chapter 9
Government Agency and Pass-Through Securities 139
Chapter 10
Corporate Bonds 167
Chapter 11
Municipal Bonds 199
vii
viii CONTENTS
Chapter 12
Convertible Bonds 227
Chapter 13
Zero Coupon Bonds and Zero Coupon Mutual Funds 255
Chapter 14
International and Emerging Market Debt 273
Chapter 15
Closed-End Funds 289
Chapter 16
Portfolio Management and Evaluation 303
Index 323