The Bond Book, Third Edition: Everything Investors Need to Know About Treasuries, Municipals, GNMAs, Corporates, Zeros, Bond Funds, Money Market Funds, and More

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  • Edition: 3rd
  • Format: Hardcover
  • Copyright: 2010-11-17
  • Publisher: McGraw-Hill Education
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The bestselling guide updated to meet therenewed public interest in bonds This new edition ofThe Bond Bookwill attract thelegions of investors fleeing the stock market in searchof safer ground. The financial crisis of 2008 causedmajor disruptions to every sector of the bond market,but Treasuries have since experienced major rallies.This edition will discuss the lessons of the crisis, as wellas the risks and opportunities it created.Providing the most up-to-date information available formaking the best bond investing decisions, this third editionexplains how to assess risks and opportunities inthis sector, buy treasuries without paying a commission,decide whether to purchase bond funds or individualbonds, and choose among the various high-yield savingsbonds now available.

Author Biography

Annette Thau, Ph.D. is a former municipal bond analyst for Chase Manhattan Bank and visiting scholar at the Columbia University Graduate School of Business. She earned her Ph.D. from Columbia and has received numerous awards, including a Woodrow Wilson Fellowship, a National Endowment for the Humanities Fellowship for Younger Humanists, and University Fellowships from Columbia University.

Table of Contents

Prefacep. xiii
Acknowledgmentsp. xvii
The Basic Basicsp. 1
The Life of a Bondp. 3
First, What Is a Bond?p. 3
How Bonds Are Issued and Tradedp. 3
Key Terms for Bondsp. 4
The Bond Market: An Overviewp. 7
The Bond Market: An Overviewp. 7
Bond Pricing: Markups and Commissionsp. 8
How Bonds Are Sold: Dealers, Brokers, and Electronic Platformsp. 11
Terms Used in Buying, Selling, and Discussing Bondsp. 17
Volatility: Why Bond Prices Go Up and Downp. 25
Interest Rate Risk, or a Tale of Principal Riskp. 25
Credit Ratings: How Credit Quality Affects the Value of Your Bondsp. 31
A Short History of Interest Ratesp. 43
The Federal Reserve and Interest Ratesp. 48
Summaryp. 50
How Much Will I Earn, or Basic Bond Mathp. 51
Bond Cash Flowsp. 51
The Many Meanings of Yieldp. 55
Total Returnp. 62
Duration and Bond Price Volatilityp. 65
Summaryp. 71
What You Need to Know before Buying Bondsp. 73
The Bond Market in the Financial Press and on the Internetp. 73
The Treasury Marketp. 74
"Yield Spreads" and Benchmarksp. 81
Investinginbonds.com, FINRA.org/marketdata and EMMA.msrb.orgp. 85
Summaryp. 94
Individual Securitiesp. 97
Treasuries, Savings Bonds, and Federal Agency Paperp. 99
What Is Unique about Treasuries?p. 100
Treasury Bills, Notes, and Bondsp. 102
Inflation-Indexed Securitiesp. 105
Buying Treasuries: Treasury Directp. 110
Zero Coupon Bondsp. 112
U.S. Savings Bondsp. 117
Federal Agenciesp. 124
Summaryp. 126
Municipal Bondsp. 129
What Is Unique about Municipal Bonds?p. 129
Should I Buy Munis? (or, Taxable-Equivalent Yield)p. 130
Credit Quality: General Obligation versus Revenue Bondsp. 133
The Rise and Fall of Bond Insurancep. 136
"Recalibrations" of Municipal Bond Ratingsp. 139
Municipal Bond Pricingp. 147
Shopping for Municipal Bonds Using the Internetp. 149
Selecting Municipal Bondsp. 165
Summaryp. 169
Additional Referencesp. 170
Appendix: The New York City Defaultp. 170
Corporate Bondsp. 173
What Is Unique about Corporate Bonds?p. 173
Risk Factors of Corporate Bondsp. 175
Corporate Bonds with Special Featuresp. 178
Junk Bondsp. 181
Shopping for Corporate Bonds Using the Internetp. 186
Summaryp. 202
Mortgage-Backed Securitiesp. 205
Why GNMAs Are Uniquep. 206
How Prepayments Affect GNMA Cash Flowsp. 211
The Vocabulary of GNMA Returnsp. 213
CMOs and Other Sons of GNMAp. 224
Agency Backing of Mortgage-Backed Securities: Ginnie, Fannie, and Freddiep. 229
Collateralized Debt Obligations (CDOs) and Collateralized Debt Swaps (CDSs)p. 232
The Financial Crisis: 2007-2008p. 235
Current State of the Mortgage-Backed and Asset-Backed Securities Marketp. 236
Summaryp. 239
Additional Referencesp. 241
International Bondsp. 243
The International Bond Market: An Overviewp. 244
Currency Riskp. 248
Emerging Markets Debt: Brady Bondsp. 250
Buying Individual International Bondsp. 254
Is There a Case for Investing in International Bonds?p. 260
Obtaining Information on International Bondsp. 261
Summaryp. 262
Investing Through Fundsp. 263
Bond Mutual Funds: An Overviewp. 265
Differences between Bond Funds and Individual Bondsp. 265
How Much Will I Earn?p. 267
The Costs of Investing in Bond Fundsp. 273
Why the NAV of Your Fund Will Go Up and Downp. 277
Selecting, Buying, and Monitoring Bond Fundsp. 285
Sources of Information Concerning Bond Fundsp. 288
Taxes and Bond Fundsp. 297
Summaryp. 299
Money Market Funds and Tax-Exempt Bond Fundsp. 301
Money Market Fundsp. 301
Bond Funds Whose Price Goes Up and Down: "Plain Vanilla" and More Speculative Fundsp. 310
Municipal Bond Fundsp. 314
Summaryp. 324
Taxable Bond Fundsp. 327
Domestic "Plain Vanilla" Taxable Bond Fundsp. 328
Treasury Inflation Protected Securities Fundsp. 336
GNMA (and Other Mortgage) Fundsp. 339
More Speculative Fundsp. 341
Miscellaneous Fundsp. 354
Summaryp. 358
Closed-End Bond Funds, Exchange-Traded Funds (ETFs), and Unit Investment Trustsp. 361
Closed-End Bond Fundsp. 361
Summary: Closed-End Fundsp. 372
Sources of Information on CEFsp. 373
Exchange-Traded Fundsp. 374
Advantages and Disadvantages of Bond ETFsp. 385
Summary: Exchange-Traded Fundsp. 390
Unit Investment Trustsp. 392
Summary: Unit Investment Trustsp. 394
Management of Bond Portfolios and Asset Allocationp. 395
Management of Bond Portfoliosp. 397
When Will I Need the Money?p. 398
Portfolio Structuresp. 399
Finding Attractive Buy Pointsp. 401
Swapsp. 405
Managing a Bond Portfolio for Total Returnp. 407
Portfolio Allocationp. 411
Portfolio Allocationp. 411
Asset Allocationp. 413
The Case for Bonds Revisitedp. 414
The Current Environment and the Bond Marketp. 415
Conclusionp. 419
Indexp. 421
Table of Contents provided by Ingram. All Rights Reserved.

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