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Advanced Bond Investing

Fixed-income investing goes much deeper than simply investing in mutual funds. Understanding the details can help you navigate the investing process with a broader view of the world of bonds.

What is the Yield Curve?
The yield curve is one of the most important concepts in understanding the bond market, but fortunately the yield curve isn’t very complicated once you learn the basics.

Definition of Steepening Yield Curve and Flattening Yield Curve
Find out what a "flattening" and "steepening" of the yield curve mean, and how the movement of the yield curve relates to economic growth and bond market performance.

What is an Inverted Yield Curve?
Get the plain-English explanation of what an inverted yield curve is, and what an inverted yield curve says about the economy.

Can Bonds Predict the Direction of the Economy?
How can investors use the bond market and the yield curve as an indicator of future economic conditions?

What is a Yield Spread?
The yield spread is one of the key metrics that bond investors can use to gauge how expensive or cheap a particular bond – or group of bonds – might be. Learn more about yield spreads and how they can help you make better investment decisions.

What is the Default Rate?
Learn what the default rate is, how likely bonds in certain categories are likely to default, and how investors can minimize their exposure to default risk.

Understanding Bond Duration
Duration may be difficult to understand at first, but learning a few simple points can help unlock the mystery of this concept.

What is a Floating Rate Bond?
Floating rate notes are bonds whose yields adjust with changes in prevailing interest rates. Learn more about the benefits - and pitfalls - of floating rate bonds, and the best way to invest in this market segment.

What are Mortgage-Backed Securities (MBS)?

Learn about the risks and historical performance of mortgage-backed securities, their role in your portfolio, and the various ways to invest in mortgage-backed securities (MBS). 

What are Commercial Mortgage-Backed Securities (CMBS)?
Learn about how commercial mortgage-backed securities (CMBS) work, and how individual investors can participate in this market sement.

What are Asset Backed Securities (ABS)?
Asset backed securities, also called ABS, are pools of loans that are packaged and sold as securities – a process known as “securitization”. Learn more about what asset backed securities are and how they can play role in bond portfolios.

PIMCO's ZROZ ETF: The Best Way to Trade the Bond Market
For those looking to make short-term bets on bond market direction, PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ) is one of the best options avaialble.

What is a Covered Bond?
The newest addition to the U.S. bond market is a staple of the European debt markets. Covered bonds are similar to the asset-backed securities that led to the credit crisis, but they're supposed to be much safer. But just what, exactly, is a covered bond? And should you buy one?

Collateralized Debt Obligations (CDOs) and the Start of the Credit Crisis
Somewhere in early 2007, one of the more complex and controversial corners of the bond world began to unravel. By March of that year, losses in the collateralized debt obligations (CDOs) market were spreading -- crushing high-risk hedge funds and spreading fear through the fixed-income world.

What is a Credit Default Swap?
Credit default swaps are the most common form of derivative in the fixed-income market. The swaps are complex investment vehicles that can be used to protect a bond buyer from the risk of default.

Where Can I Buy a Bowie Bond?
Back in 1997, an investment banker named David Pullman created a series of bonds backed by the royalties on music owned by rock star David Bowie. The deal captured the imagination of Wall Street, which has since issued dozens of other bonds that "securitize" intellectual property. The deal also left thousands of fans wondering: Where can I buy a Bowie Bond?

How to Use Mutual Fund Flow Data to Make Better Decisions
Cash flows in and out of mutual funds and exchange-traded funds can be a useful tool for investors - providing you know how to use them.

What are Auction Rate Securities?
An Auction Rate Security, or ARS, is a complicated debt instrument in which interest rates are reset on a regular basis through a Dutch Auction. The ARS market has high minimum investment requirements -- and that turned out to be a good thing for average investors. In early 2008, the ARS market collapsed -- leaving institutional investors and wealthy people holding the bag.

Opportunity Cost And Your Investments
Opportunity costs may be invisible, but they are a real consideration when making investment decisions. Learn four ways to avoid opportunity cost.

Bond Market Data Resources
Finding quality bond market data takes some digging, but there's plenty out there if you know where to look. Here are some of the best free resources on the web for current and historical bond market data:

The Math Behind Duration
If you're trying to understand how duration works, this paper from the the University of Virginia Darden School of Business will help you get started.

What is a Catastrophe Bond?
The website Artemis.bm provides this concise, plain-English explanations of how catastrophe bonds work.

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