We discussed the basics of Bonds day before yesterday and I read this awesome post on Bonds by Ritholtz.
Excerpts:
The most important thing you need to know about bonds is that they are essentially loans to some entity. As such, there are three main elements to any bond:
Quality: The credit worthiness of the borrower.
Duration: The length of the loan.
Yield: What the loan pays you in interest.
As is always the case in investing, there is no free lunch.
If you want higher yield, you are either buying riskier bonds or lending money for a longer period of time (you can also use leverage, making a riskier investment even riskier).
Read the full post by Ritholtz
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Source: http://personalfinance201.com/barry-ritholtz-on-bonds.html
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