2. Market Conditions Bear Market – a period in which investment prices fall and there is a negative sentiment about its recovery Bull Market – a period in which investment prices are rising or are expected to rise

3. Bonds Bond – a written promise to pay a debt by a specified date -when you buy a bond you are giving a loan -corporations and the government sell bonds to raise money

4. Bonds (cont.) -stockbrokers handle bond transactions -guaranteed payment unless corp. fails -less risky than stocks = lower return High-yield bonds (a.k.a. junk bonds) -high-risk, high return bonds sold by corporations in great risk of failing

5. How do you know the risk of a bond? 1. Look at the bond’s rate of return. -higher the rate, higher the risk 2. Bond Rating Services -evaluate corps. financial situations and rate according to ability to pay -Ex. Moody’s, Standard and Poor’s -ratings found at library, stockbrokerage, internet

7. What to know when searching for bonds Almost all bonds have a $1,000 face value Price – given in percentage of face value Coupon – the interest rate for the bond -most rates are fixed with two coupon payments per year Maturity – the date on which the repayment of the principle is due