Finance Topic: Bonds

Calculators:

Fundamentals

Plain Talk®: Bond Fund Investing by Vanguard. Very extensive introduction to bonds and bond funds. Among the topics covered:

Reasons for investing in bond funds
The basic types of bonds
How a bond fund works and its potential disadvantages
How bond funds vary based on their blend of bond type (corporate, municipal, etc.), credit quality (U.S. treasury, investment grade, etc.) and average maturity (short, medium or long-term).
"How interest rates affect bond fund prices"
"How to measure bond performance"
Risks associated with bond fund ownership
"How much should a person invest in bond funds?"
"Selecting the right bond fund"

InvestinginBonds.com by the Bond Market Association. Extensive bond resource that includes:

"Seven Simple Steps to Educate Yourself About Investing in Bonds."
Daily bond prices.
A checklist of questions to answer when considering bond investment.
Separate in-depth guides to municipal bonds, corporate bonds, U.S Treasury inflation-indexed securities and mortgage securities.
Bond dealers

Bond Valuation by TeachMeFinance.com. How to calculate the present value of a bond based on par value, maturity date, annual coupon payments and market interest rate.

Bond Professor by Twenty-First Century Municipals.

FAQ Answers to such questions as:
"Why is it that bond prices go the opposite direction from bond yields?"
"What is the difference between investing in bond funds versus individual bonds?"
"What are Zero Coupons and Strips?"
Bond Library Select "U.S. Savings Bonds FAQs"

Types of Bonds by Invest Smart. Short explanations of corporate, municipal, mortgage-backed and foreign bonds, as well as U.S. Treasuries.

Relationship of Price and Interest Rate by The Investment FAQ. Detailed explanation of the inverse relationship between the price of a bond and prevailing interest rates through the use of present value and net present value formulas.

Bond Yield-to-Maturity by datachimp. Thorough lesson on the subject of yield-to-maturity, including related terms and the formula for calculating it. A detailed example walks through the calculations and covers key concepts.

Government and Municipal Bonds

An Investor's Guide to Municipal Bonds by InvestingInBonds.com. Among the topics covered:

Treasury Debt Instruments by The Investment FAQ. Introduction to Treasuries, including a comparison of bills, notes and bonds, how they are auctioned and the tax treatment of interest.

U.S. Savings Bonds by The Investment FAQ. Definition of U.S. Savings Bonds followed by very detailed coverage of the two types of bonds issued by the U.S. Treasury: Series EE Bonds and I Bonds.

Government and Municipal Bonds by Equity Analytics, Ltd. Descriptions of many categories of bonds:

Municipal Bonds: General Obligation, Limited, Special Tax, Revenue, Industrial Revenue, Housing, Moral Obligation, Double Barreled, Tax Anticipation Noted, Bond Anticipation Noted and Revenue Anticipation Noted.
Government Securities: U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, Federal Land Banks, Federal Intermediate Credit Bank, Bank for Cooperatives, Federal Home Loan Banks, Federal National Mortgage Association (Fannie Mae) and Government National Mortgage Association (Ginnie Mae).

U.S. Savings Bonds Online by the Bureau of the Public Debt. This Federal Government site offers a huge array of resources related to savings bonds, including detailed information and data about EE, I and HH Bonds.

Estimating Yields on Treasury Securities by Equity Analytics. Formulas, such as the Discount Yield Method, for calculating yields on T-Bills and Treasury Notes and Bonds. Examples show how to apply the formulas.

Value of U.S. Treasury Bills by The Investment FAQ. How to calculate the current value and coupon yield for U.S. Treasury Bills, including the formulas and where to look up values used in the formulas in the Wall Street Journal.

Corporate Bonds

Corporate Bonds Part I and Part 2 by Equity Analytics, Ltd. An overview of the terms and concepts related to corporate bonds and the types of corporate bonds.

An Investor's Guide to Corporate Bonds by InvestingInBonds.com. Among the topics covered:

Zero Coupon Bonds

Zero Coupon Bonds by The Investment FAQ. An introduction to zero coupon bonds, tax implications of ownership and who issues them.

Indexed Bonds

Inflation-Indexed Securities by the Bureau of the Public Debt. Access a wide range of information about inflation-indexed bonds, such as:

Buying Treasury Inflation-Indexed Securities This is an excellent starting point for learning about this type of investment. It addresses the basics of how this bond works, why it may benefit an investor, how interest is calculated, the tax implications and how to purchase them.
Summary of Treasury Inflation-Indexed Securities Defines the basic terms of these bonds, such as how principal and interest rates are calculated, how the inflation rate is set and the basis on which the value of the bonds is calculated at maturity.

If you are curious about the Bureau of the Public Debt, it states its mission this way: "Our job is to borrow the money needed to operate the Federal Government and to account for the resulting debt. In a nutshell, we borrow by selling Treasury bills, notes, and bonds, as well as US Savings Bonds; we pay interest to investors; and, when the time comes to pay back the loans, we redeem investors' securities."

These Bonds Looked Like Losers. They're Not by Dean Foust, BusinessWeek, 1997. Assesses inflation-indexed bonds as an investment vehicle, including tax implications and reduction of risk. Also, refer to the magazine's brief description of How Inflation-Indexed Bonds Work to see an example of how the principal and interest would be calculated, based on the example's interest and inflation rates.

US Treasury Issues Inflation-Indexed Bonds by Morevalue.com A detailed analysis of the US Treasury's issue of bonds that are indexed to the rate of inflation (but offer lower fixed yields than standard Treasury notes). Various formulas, such as Yield to Maturity, are used to evaluate inflation-indexed bonds as an investment vehicle. Also, the inflationary premium is calculated when compared to standard Treasury bonds.

Why US Inflation Bonds Are a Steal by Carolyn T. Geer, Fortune. Compares the relative merits of inflation-indexed bonds with conventional Treasury bonds, such as the low-risk insurance they provide against inflation and tax-deferred interest.

Bond Data

Bonds Online by Twenty-First Century Municipals. Although some portions of the site require paid subscriptions, the following resources are offered free:

Quotes/Search Locate currently offered bonds that meet your criteria. For example, you can specify such variables as state, maturity, rating, yield and taxable/nontaxable for municipal bonds. The bond categories are Municipal, Corporate, CMO, Zero Coupon and Treasury.
Treasuries and Savings Bonds Many resources, such as a capital markets commentary, upcoming treasury auctions, selected weekly rates for Treasuries and current savings bond rates.
Corporates Corporate bond yields and corporate bond search.

Calculators

Yields

Current Bond Yield by Kurt Tietjen Consulting & High Peak Software. Calculates the yield based on face amount, interest rate and price.

What is my current yield on coupon income received? by SmartCalc. After entering the bond's current price, face value, coupon rate, the type of bond (Municipal, Treasury or Corporate) and your federal and state tax rates, the calculator displays the before and after-tax yield on your coupon income. A helpful feature of the calculator is that you can click on any of the terms to obtain definitions, context and examples.

What is my yield to maturity? by FinanCenter, Inc. The calculator provides your investment return before and after taxes as both a taxable and tax-deferred investment. Also included are two graphs:

Relationship between yield to maturity and purchase price as a percentage of face value.
Relationship between your return after tax and the purchase price as a percentage of face value.

What might be my yield-to-call? by FinanCenter, Inc. The results of your inputs are displayed as your yield at maturity and at call. Also, a graph shows the relationship between the yield at call and the call price as a percentage of face value.

Price/Value

Bond Price by Kurt Tietjen Consulting & High Peak Software. Calculates the value of a bond based on your inputs for face amount, interest rate, number of payments/year, number of years, yield-to-maturity, comparative rate and call premium.

Bond Value Calculator by Paragon Services. Find the value of an existing bond based on your inputs for face value, years to maturity, bond's rate and current rate. The output includes a graph showing how the value declines as the current interest rate increases.

How will rate changes affect my bond's current value? by FinanCenter, Inc. First, input the price you paid, face value, coupon rate, today's market rate and the number of months until maturity. Then, the calculator will display several current bond values and your gain or loss based on how rates vary above and below the market rate you specified. A graph shows the relationship between the market rate and bond price.

What Price Should I Pay for a Bond? by FinanCenter, Inc. After entering a bond's face value, coupon rate, today's market rate the yield to maturity you desire, the calculator will display the market value of the bond and the price you need to pay to achieve your desired yield to maturity. You can also read an analysis of the results. For example, you'll learn how "the market value of a bond is generally based upon a comparison of its coupon rate and the current rate in the market place."

Other Calculators

Convertible Bond Calculator by Numa Financial Systems. After inputting information about both the convertible bond (conversion ratio, coupon rate, etc.) and the stock (share price, dividend yield, etc.), the calculator will output extensive data covering stock conversion, downside risk, theoretical option evaluation and a dividend growth table. Includes an explanation of the terms used for both inputs and outputs.

Note: See the Indexed Bonds section for a calculator for comparing payouts between inflation-indexed and conventional bonds.

Bond Ratings and News

CNNfn Bond Center

Obtain the average current rates for Treasury, municipal, corporate, cmo and zero coupon bonds.
Search for currently offered bonds meeting your investment criteria. (Another service offering this capability is Tradebonds.com)
Read breaking bond-related stories and special reports (such as commentary on the investment appeal of bond funds).

Bond Ratings: Agencies and Definitions by Equity Analytics. Chart showing the ratings codes for each of four bond rating agencies. For example, Moody's uses "Aaa" for its highest rating while S&P, Fitch and DCR use "AAA."

New and Revised Daily Ratings of Industrial Revenue Bonds by Standard & Poor's.

Bond Markets

The U.S. Bond Market by The Bond Market Association. Topics covered:

The role of the bond market in the overall economy.
Who owns bonds (7 categories listed by percentage of ownership – such as Mutual Funds and Insurance Companies) and why.
Understanding how the general level of interest rates impacts the market value of bonds.
Overviews of the following bond markets: U.S. Treasury, Municipal Securities, Corporate Bond, Money Market Instruments, Federal Agency Securities, Mortgage Securities and Asset-Backed Securities.

Glossaries

The following resources offer glossaries of bond-related terms.

Bond Professor Glossary by Twenty-First Century Municipals.

Risk Management Glossary by Contingency Analysis. Although less focused on bonds than the "Bond Professor Glossary," it contains some bond-related terms such as "callable bond," "high-yield bond," "junk bond," "par value," "yield" and "zero coupon bond."

Fundamentals Government and Municipal Bonds Corporate Bonds Zero Coupon Bonds Indexed Bonds Bond Data Calculators: Yields Price/Value Other Calculators Bond Ratings and News Bond Markets Glossaries	Fundamentals Plain Talk®: Bond Fund Investing by Vanguard. Very extensive introduction to bonds and bond funds. Among the topics covered: Reasons for investing in bond funds The basic types of bonds How a bond fund works and its potential disadvantages How bond funds vary based on their blend of bond type (corporate, municipal, etc.), credit quality (U.S. treasury, investment grade, etc.) and average maturity (short, medium or long-term). "How interest rates affect bond fund prices" "How to measure bond performance" Risks associated with bond fund ownership "How much should a person invest in bond funds?" "Selecting the right bond fund" InvestinginBonds.com by the Bond Market Association. Extensive bond resource that includes: "Seven Simple Steps to Educate Yourself About Investing in Bonds." Daily bond prices. A checklist of questions to answer when considering bond investment. Separate in-depth guides to municipal bonds, corporate bonds, U.S Treasury inflation-indexed securities and mortgage securities. Bond dealers Bond Valuation by TeachMeFinance.com. How to calculate the present value of a bond based on par value, maturity date, annual coupon payments and market interest rate. Bond Professor by Twenty-First Century Municipals. FAQ Answers to such questions as: "Why is it that bond prices go the opposite direction from bond yields?" "What is the difference between investing in bond funds versus individual bonds?" "What are Zero Coupons and Strips?" Bond Library Select "U.S. Savings Bonds FAQs" Types of Bonds by Invest Smart. Short explanations of corporate, municipal, mortgage-backed and foreign bonds, as well as U.S. Treasuries. Relationship of Price and Interest Rate by The Investment FAQ. Detailed explanation of the inverse relationship between the price of a bond and prevailing interest rates through the use of present value and net present value formulas. Bond Yield-to-Maturity by datachimp. Thorough lesson on the subject of yield-to-maturity, including related terms and the formula for calculating it. A detailed example walks through the calculations and covers key concepts.

	Government and Municipal Bonds An Investor's Guide to Municipal Bonds by InvestingInBonds.com. Among the topics covered: Understanding Yields How Safe are Municipal Bonds? Types of Tax-exempt Municipal Bonds Tax-exempt/ Taxable Yield Equivalents Treasury Debt Instruments by The Investment FAQ. Introduction to Treasuries, including a comparison of bills, notes and bonds, how they are auctioned and the tax treatment of interest. U.S. Savings Bonds by The Investment FAQ. Definition of U.S. Savings Bonds followed by very detailed coverage of the two types of bonds issued by the U.S. Treasury: Series EE Bonds and I Bonds. Government and Municipal Bonds by Equity Analytics, Ltd. Descriptions of many categories of bonds: Municipal Bonds: General Obligation, Limited, Special Tax, Revenue, Industrial Revenue, Housing, Moral Obligation, Double Barreled, Tax Anticipation Noted, Bond Anticipation Noted and Revenue Anticipation Noted. Government Securities: U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, Federal Land Banks, Federal Intermediate Credit Bank, Bank for Cooperatives, Federal Home Loan Banks, Federal National Mortgage Association (Fannie Mae) and Government National Mortgage Association (Ginnie Mae). U.S. Savings Bonds Online by the Bureau of the Public Debt. This Federal Government site offers a huge array of resources related to savings bonds, including detailed information and data about EE, I and HH Bonds. Estimating Yields on Treasury Securities by Equity Analytics. Formulas, such as the Discount Yield Method, for calculating yields on T-Bills and Treasury Notes and Bonds. Examples show how to apply the formulas. Value of U.S. Treasury Bills by The Investment FAQ. How to calculate the current value and coupon yield for U.S. Treasury Bills, including the formulas and where to look up values used in the formulas in the Wall Street Journal.

	Corporate Bonds Corporate Bonds Part I and Part 2 by Equity Analytics, Ltd. An overview of the terms and concepts related to corporate bonds and the types of corporate bonds. An Investor's Guide to Corporate Bonds by InvestingInBonds.com. Among the topics covered: Benefits of Investing in Corporate Bonds Understanding Interest-Rate Risk Basic Terms of Bonds Understanding "Call" and Refunding Risk

	Zero Coupon Bonds Zero Coupon Bonds by The Investment FAQ. An introduction to zero coupon bonds, tax implications of ownership and who issues them.

	Indexed Bonds Inflation-Indexed Securities by the Bureau of the Public Debt. Access a wide range of information about inflation-indexed bonds, such as: Buying Treasury Inflation-Indexed Securities This is an excellent starting point for learning about this type of investment. It addresses the basics of how this bond works, why it may benefit an investor, how interest is calculated, the tax implications and how to purchase them. Summary of Treasury Inflation-Indexed Securities Defines the basic terms of these bonds, such as how principal and interest rates are calculated, how the inflation rate is set and the basis on which the value of the bonds is calculated at maturity. If you are curious about the Bureau of the Public Debt, it states its mission this way: "Our job is to borrow the money needed to operate the Federal Government and to account for the resulting debt. In a nutshell, we borrow by selling Treasury bills, notes, and bonds, as well as US Savings Bonds; we pay interest to investors; and, when the time comes to pay back the loans, we redeem investors' securities." These Bonds Looked Like Losers. They're Not by Dean Foust, BusinessWeek, 1997. Assesses inflation-indexed bonds as an investment vehicle, including tax implications and reduction of risk. Also, refer to the magazine's brief description of How Inflation-Indexed Bonds Work to see an example of how the principal and interest would be calculated, based on the example's interest and inflation rates. US Treasury Issues Inflation-Indexed Bonds by Morevalue.com A detailed analysis of the US Treasury's issue of bonds that are indexed to the rate of inflation (but offer lower fixed yields than standard Treasury notes). Various formulas, such as Yield to Maturity, are used to evaluate inflation-indexed bonds as an investment vehicle. Also, the inflationary premium is calculated when compared to standard Treasury bonds. Why US Inflation Bonds Are a Steal by Carolyn T. Geer, Fortune. Compares the relative merits of inflation-indexed bonds with conventional Treasury bonds, such as the low-risk insurance they provide against inflation and tax-deferred interest.

	Bond Data Bonds Online by Twenty-First Century Municipals. Although some portions of the site require paid subscriptions, the following resources are offered free: Quotes/Search Locate currently offered bonds that meet your criteria. For example, you can specify such variables as state, maturity, rating, yield and taxable/nontaxable for municipal bonds. The bond categories are Municipal, Corporate, CMO, Zero Coupon and Treasury. Treasuries and Savings Bonds Many resources, such as a capital markets commentary, upcoming treasury auctions, selected weekly rates for Treasuries and current savings bond rates. Corporates Corporate bond yields and corporate bond search.

	Calculators Yields Current Bond Yield by Kurt Tietjen Consulting & High Peak Software. Calculates the yield based on face amount, interest rate and price. What is my current yield on coupon income received? by SmartCalc. After entering the bond's current price, face value, coupon rate, the type of bond (Municipal, Treasury or Corporate) and your federal and state tax rates, the calculator displays the before and after-tax yield on your coupon income. A helpful feature of the calculator is that you can click on any of the terms to obtain definitions, context and examples. What is my yield to maturity? by FinanCenter, Inc. The calculator provides your investment return before and after taxes as both a taxable and tax-deferred investment. Also included are two graphs: Relationship between yield to maturity and purchase price as a percentage of face value. Relationship between your return after tax and the purchase price as a percentage of face value. What might be my yield-to-call? by FinanCenter, Inc. The results of your inputs are displayed as your yield at maturity and at call. Also, a graph shows the relationship between the yield at call and the call price as a percentage of face value. Price/Value Bond Price by Kurt Tietjen Consulting & High Peak Software. Calculates the value of a bond based on your inputs for face amount, interest rate, number of payments/year, number of years, yield-to-maturity, comparative rate and call premium. Bond Value Calculator by Paragon Services. Find the value of an existing bond based on your inputs for face value, years to maturity, bond's rate and current rate. The output includes a graph showing how the value declines as the current interest rate increases. How will rate changes affect my bond's current value? by FinanCenter, Inc. First, input the price you paid, face value, coupon rate, today's market rate and the number of months until maturity. Then, the calculator will display several current bond values and your gain or loss based on how rates vary above and below the market rate you specified. A graph shows the relationship between the market rate and bond price. What Price Should I Pay for a Bond? by FinanCenter, Inc. After entering a bond's face value, coupon rate, today's market rate the yield to maturity you desire, the calculator will display the market value of the bond and the price you need to pay to achieve your desired yield to maturity. You can also read an analysis of the results. For example, you'll learn how "the market value of a bond is generally based upon a comparison of its coupon rate and the current rate in the market place." Other Calculators Convertible Bond Calculator by Numa Financial Systems. After inputting information about both the convertible bond (conversion ratio, coupon rate, etc.) and the stock (share price, dividend yield, etc.), the calculator will output extensive data covering stock conversion, downside risk, theoretical option evaluation and a dividend growth table. Includes an explanation of the terms used for both inputs and outputs. Note: See the Indexed Bonds section for a calculator for comparing payouts between inflation-indexed and conventional bonds.

	Bond Ratings and News CNNfn Bond Center Obtain the average current rates for Treasury, municipal, corporate, cmo and zero coupon bonds. Search for currently offered bonds meeting your investment criteria. (Another service offering this capability is Tradebonds.com) Read breaking bond-related stories and special reports (such as commentary on the investment appeal of bond funds). Bond Ratings: Agencies and Definitions by Equity Analytics. Chart showing the ratings codes for each of four bond rating agencies. For example, Moody's uses "Aaa" for its highest rating while S&P, Fitch and DCR use "AAA." New and Revised Daily Ratings of Industrial Revenue Bonds by Standard & Poor's.

	Bond Markets The U.S. Bond Market by The Bond Market Association. Topics covered: The role of the bond market in the overall economy. Who owns bonds (7 categories listed by percentage of ownership – such as Mutual Funds and Insurance Companies) and why. Understanding how the general level of interest rates impacts the market value of bonds. Overviews of the following bond markets: U.S. Treasury, Municipal Securities, Corporate Bond, Money Market Instruments, Federal Agency Securities, Mortgage Securities and Asset-Backed Securities.

	Glossaries The following resources offer glossaries of bond-related terms. Bond Professor Glossary by Twenty-First Century Municipals. Risk Management Glossary by Contingency Analysis. Although less focused on bonds than the "Bond Professor Glossary," it contains some bond-related terms such as "callable bond," "high-yield bond," "junk bond," "par value," "yield" and "zero coupon bond."