1. Simply Bonds
Traded in the SMG

2. Bond Basics Bonds are loans Over 3 Million domestic options
Basically an IOU
Not traded daily
Over 3 Million domestic options
Government
Municipals
Corporate
Government or treasury bonds are backed by full faith & credit of the US Govt. They are considered “bulletproof” and thus un-rated
Par value = amount repaid to investor when the bond matures (similar to principal)

3. Terminology Par Value = Face Value
Accrued Interest - the interest that has accumulated since the principal investment, or since the previous interest payment.
For all SELL Transactions the SEC Fee of 5.6 cents per $10,000 trading amount is always added! ...

4. Bond Pricing Bonds are priced per $100 of bond principal
A $4,000 bond with a price of $99.50/$100 will cost you:
(40 x = $3,980) + accrued interest + commission
If you sell a $4,000 bond you will receive:
(40 x = $3,980) + accrued interest – commission – SEC fee
Buying a bond you will pay accrued interest + commission (2%)
Selling a bond you get accrued interest – commission (2%) – SEC fee
If bond is resold (secondary market) it can be done:
At a discount = < par
At a premium = > par
This fluctuates based on interest rates.

5. Par If bond is resold (secondary market) it can be:
At a discount = < par
At a premium = > par
This fluctuates based on interest rates and time until maturity

6. Increase Investment There are two ways to increase your investment:
Interest Payments
Increase in the resale price of the bond

7. What Causes Bond Prices to Change?
Economic Crisis
Natural & Unnatural Disasters
Peace & Prosperity
Interest Rates
Rates increase = bond price decrease
Rates decrease = bond price increase
Basic supply & demand
As stocks become more attractive, bonds are less popular.
to entice bond buyers interest rates go up

8. Bonds in SMG Selection of 8000 – investment grade only
Treasurys ($100 increments)
Municipals (state issued only - $1000 increments)
Corporate ($1000 increments)
Maturity dates no shorter than 5 years
Trade in “Real Time”
May not be short sold
Daily feed of pricing from S&P
Maturity is the length of time the money is loaned. On this date, the original principal borrowed “comes due”. Longer maturity terms equal higher interest rates.
Coupon frequency is anything from monthly, quarterly, semi-annually to yearly
Investment grade means rated Triple B or higher.
S&P is considered one of the leading bond rating companies in the industry.

9. Bond “Ticker Symbols” AXXXX.YYNN.N Annual interest rate Maturity Year
T M or C
Seq #
Maturity Year
Annual interest rate

10. How to Select Buy early in the game Look for highest current yield
Select bonds with an interest payment:
close to the game end date
Frequent payment schedules
Fed rate cuts indicate a good bond buying time

11. Bonds vs Stocks BONDS STOCKS What you get… IOU Ownership in company
How you trade…
$ value
shares
How to find…
Cusip
Ticker Symbol

12. What is a Bond? Lesson Activity: You are investing $3000.
In a corporate bond issued for one year at 6% interest rate. How much interest will you make on your investment?
$180

13. Bond Information Information for:C419C.166.87 Trade CUSIP12189TAB0
ISSUER DESCRIPTION BURLINGTON NORTHN SANTA FE COR
ISSUING DESCRIPTIONDEB
DATED(ISSUE) DATE 02/15/1996
MATURITY DATE 02/15/2016
PREVIOUS PAYMENT DATE 08/15/2008
NEXT PAYMENT DATE 02/15/2009
INTEREST RATE (%) 6.875
INTEREST PAY FREQ SA
SP RATINGBBB+MDY RATINGN/Rl FTH RATINGN/Rl
CURRENT PRICE/100 ($)
CURRENT YIELD (%)

14. Bond Information Information for:C418F.338.30 Trade CUSIP125509BE8
ISSUER DESCRIPTIONCIGNA CORP
ISSUING DESCRIPTIONNTDATED(ISSUE) DATE07/15/1997
MATURITY DATE 01/15/2033
PREVIOUS PAYMENT DATE 07/15/2008
NEXT PAYMENT DATE 01/15/2009
INTEREST RATE (%) 8.3
INTEREST PAY FREQSA
SP RATINGBBB+MDY RATINGBBB+FTH RATINGBBB+
CURRENT PRICE/100 ($)
CURRENT YIELD (%)

15. InvestinginBonds.com