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Tip of the Day "Fee-Only" is Your Friend

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Bond Pricing Calculator

Bonds are generally a stabilizing, low-risk investment. However, when in the market for bonds, a buyer needs to research a bond's performance. A potential buyer should also become familiar with different types of bonds, as well as how yield, price, interest rate, and date of maturity affect the dollar value of the investment. To assist in bond pricing, one can take advantage of any number of online bond calculators. These calculators not only compute a range of financial information, but many times one can get a summary and printout of the information. Online bond pricing calculators can show current worth, worth over several months, maturity rate, accrued interest, annual rate, yield to maturity and redemption value for a range of fixed income instruments, as well as zero coupon bonds. They can also give information about zero coupon bonds, whether the buyer should purchase a taxable or tax exempt bond, and even whether the time is right to sell a bond. Many times this information can be obtained in summary form and printed out for a buyer's records.

Most bond calculators are simple and easy to use. Depending on which calculator the buyer uses different information such as the series and denomination of the bond and the date the bond was issued. Particular information must be plugged in as well as the type of bond (ie, EE, I, etc.). Some calculators will calculate for either the "yield-to-maturity" or the "current price."

When buying bonds, remember that basically a bond is a loan, and the par value or principal balance, is the amount of the loan. Bonds are issued at 1) face value, 2) at a discount (ie, it is trading at less than its par value), and 3) at a premium (ie, at a price greater than 100).

Bond calculators are important and helpful tools for anyone who is considering the purchase of bonds for an investment portfolio.

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Definition: All of your investments.  If you own five stocks, a bond, and have bank CD's, those would be collectively referred to as your portfolio. TeenAnalyst Advice: When you hear a person talking about their portfolio, they're just referring to all of their investments.  If they say their portfolio is up...

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