The Bond Book, Third Edition: Everything Investors Need to Know About Treasuries, Municipals, GNMAs, Corporates, Zeros, Bond Funds, Money Market Funds, and More

ISBN 13:
9780071664707
ISBN 10:
007166470X
Edition: 3rd
Format: Hardcover
Copyright: 11/17/2010
Publisher: McGraw-Hill Education

Note: Not guaranteed to come with supplemental materials (access cards, study guides, lab manuals, CDs, etc.)

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Summary

The bestselling guide updated to meet therenewed public interest in bonds This new edition ofThe Bond Bookwill attract thelegions of investors fleeing the stock market in searchof safer ground. The financial crisis of 2008 causedmajor disruptions to every sector of the bond market,but Treasuries have since experienced major rallies.This edition will discuss the lessons of the crisis, as wellas the risks and opportunities it created.Providing the most up-to-date information available formaking the best bond investing decisions, this third editionexplains how to assess risks and opportunities inthis sector, buy treasuries without paying a commission,decide whether to purchase bond funds or individualbonds, and choose among the various high-yield savingsbonds now available.

Preface	p. xiii
Acknowledgments	p. xvii
The Basic Basics	p. 1
The Life of a Bond	p. 3
First, What Is a Bond?	p. 3
How Bonds Are Issued and Traded	p. 3
Key Terms for Bonds	p. 4
The Bond Market: An Overview	p. 7
The Bond Market: An Overview	p. 7
Bond Pricing: Markups and Commissions	p. 8
How Bonds Are Sold: Dealers, Brokers, and Electronic Platforms	p. 11
Terms Used in Buying, Selling, and Discussing Bonds	p. 17
Volatility: Why Bond Prices Go Up and Down	p. 25
Interest Rate Risk, or a Tale of Principal Risk	p. 25
Credit Ratings: How Credit Quality Affects the Value of Your Bonds	p. 31
A Short History of Interest Rates	p. 43
The Federal Reserve and Interest Rates	p. 48
Summary	p. 50
How Much Will I Earn, or Basic Bond Math	p. 51
Bond Cash Flows	p. 51
The Many Meanings of Yield	p. 55
Total Return	p. 62
Duration and Bond Price Volatility	p. 65
Summary	p. 71
What You Need to Know before Buying Bonds	p. 73
The Bond Market in the Financial Press and on the Internet	p. 73
The Treasury Market	p. 74
"Yield Spreads" and Benchmarks	p. 81
Investinginbonds.com, FINRA.org/marketdata and EMMA.msrb.org	p. 85
Summary	p. 94
Individual Securities	p. 97
Treasuries, Savings Bonds, and Federal Agency Paper	p. 99
What Is Unique about Treasuries?	p. 100
Treasury Bills, Notes, and Bonds	p. 102
Inflation-Indexed Securities	p. 105
Buying Treasuries: Treasury Direct	p. 110
Zero Coupon Bonds	p. 112
U.S. Savings Bonds	p. 117
Federal Agencies	p. 124
Summary	p. 126
Municipal Bonds	p. 129
What Is Unique about Municipal Bonds?	p. 129
Should I Buy Munis? (or, Taxable-Equivalent Yield)	p. 130
Credit Quality: General Obligation versus Revenue Bonds	p. 133
The Rise and Fall of Bond Insurance	p. 136
"Recalibrations" of Municipal Bond Ratings	p. 139
Municipal Bond Pricing	p. 147
Shopping for Municipal Bonds Using the Internet	p. 149
Selecting Municipal Bonds	p. 165
Summary	p. 169
Additional References	p. 170
Appendix: The New York City Default	p. 170
Corporate Bonds	p. 173
What Is Unique about Corporate Bonds?	p. 173
Risk Factors of Corporate Bonds	p. 175
Corporate Bonds with Special Features	p. 178
Junk Bonds	p. 181
Shopping for Corporate Bonds Using the Internet	p. 186
Summary	p. 202
Mortgage-Backed Securities	p. 205
Why GNMAs Are Unique	p. 206
How Prepayments Affect GNMA Cash Flows	p. 211
The Vocabulary of GNMA Returns	p. 213
CMOs and Other Sons of GNMA	p. 224
Agency Backing of Mortgage-Backed Securities: Ginnie, Fannie, and Freddie	p. 229
Collateralized Debt Obligations (CDOs) and Collateralized Debt Swaps (CDSs)	p. 232
The Financial Crisis: 2007-2008	p. 235
Current State of the Mortgage-Backed and Asset-Backed Securities Market	p. 236
Summary	p. 239
Additional References	p. 241
International Bonds	p. 243
The International Bond Market: An Overview	p. 244
Currency Risk	p. 248
Emerging Markets Debt: Brady Bonds	p. 250
Buying Individual International Bonds	p. 254
Is There a Case for Investing in International Bonds?	p. 260
Obtaining Information on International Bonds	p. 261
Summary	p. 262
Investing Through Funds	p. 263
Bond Mutual Funds: An Overview	p. 265
Differences between Bond Funds and Individual Bonds	p. 265
How Much Will I Earn?	p. 267
The Costs of Investing in Bond Funds	p. 273
Why the NAV of Your Fund Will Go Up and Down	p. 277
Selecting, Buying, and Monitoring Bond Funds	p. 285
Sources of Information Concerning Bond Funds	p. 288
Taxes and Bond Funds	p. 297
Summary	p. 299
Money Market Funds and Tax-Exempt Bond Funds	p. 301
Money Market Funds	p. 301
Bond Funds Whose Price Goes Up and Down: "Plain Vanilla" and More Speculative Funds	p. 310
Municipal Bond Funds	p. 314
Summary	p. 324
Taxable Bond Funds	p. 327
Domestic "Plain Vanilla" Taxable Bond Funds	p. 328
Treasury Inflation Protected Securities Funds	p. 336
GNMA (and Other Mortgage) Funds	p. 339
More Speculative Funds	p. 341
Miscellaneous Funds	p. 354
Summary	p. 358
Closed-End Bond Funds, Exchange-Traded Funds (ETFs), and Unit Investment Trusts	p. 361
Closed-End Bond Funds	p. 361
Summary: Closed-End Funds	p. 372
Sources of Information on CEFs	p. 373
Exchange-Traded Funds	p. 374
Advantages and Disadvantages of Bond ETFs	p. 385
Summary: Exchange-Traded Funds	p. 390
Unit Investment Trusts	p. 392
Summary: Unit Investment Trusts	p. 394
Management of Bond Portfolios and Asset Allocation	p. 395
Management of Bond Portfolios	p. 397
When Will I Need the Money?	p. 398
Portfolio Structures	p. 399
Finding Attractive Buy Points	p. 401
Swaps	p. 405
Managing a Bond Portfolio for Total Return	p. 407
Portfolio Allocation	p. 411
Portfolio Allocation	p. 411
Asset Allocation	p. 413
The Case for Bonds Revisited	p. 414
The Current Environment and the Bond Market	p. 415
Conclusion	p. 419
Index	p. 421
Table of Contents provided by Ingram. All Rights Reserved.