Asset module
Bonds & Fixed Income
Government, corporate, municipal, TIPS.
Key lessons
- ◆Coupon is the fixed interest rate on face value.
- ◆Yield to maturity reflects price paid, coupons and time remaining.
- ◆Duration estimates price sensitivity to interest rate changes.
- ◆TIPS principal adjusts with inflation (CPI).
- ◆Municipal bond interest is often federally tax-exempt.
- ◆Credit ratings estimate default risk; they are opinions, not guarantees.
Risks
- • Interest-rate risk: prices fall when rates rise.
- • Default and credit risk.
- • Liquidity risk in thinly traded issues.