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4. Purchase Process Price Transparency Bond Markets Bond Valuation > Bond Markets Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance?campaign_content=book_192_section_67&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=dir ect&utm_source=boundless

5. Buying a bond involves setting up an account with a broker and requesting that the broker buy bonds on the buyer's behalf. An individual can also purchase bonds by investing in bond funds, which hold baskets of bonds rather than competing for individual bond sales. Most bond funds pay out dividends more frequently than individual bonds. Purchase Process Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/bond-valuation-6/bond-markets-67/purchase-process-302- 8351?campaign_content=book_192_section_67&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl ess Bond Brokers View on Boundless.com Bond Valuation > Bond Markets

6. A market is transparent if much is known–by many–about what products, services, or capital assets are available at what price and where. In most developed bond markets, such as the United States, Japan, and western Europe, bonds trade in decentralized, dealer-based, over-the-counter markets. Poor transparency contributes to investor differences in bond valuations, as well as other inefficiencies that may lead to economic losses for market participants and, ultimately, inhibit business development. Price Transparency Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/bond-valuation-6/bond-markets-67/price-transparency-303- 1005?campaign_content=book_192_section_67&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl ess New York Stock Exchange View on Boundless.com Bond Valuation > Bond Markets

7. Free to share, print, make copies and changes. Get yours at www.boundless.com Appendix

8. Key terms bond funds A bond fund or debt fund is a fund that invests in bonds or other debt securities. Bond funds can be contrasted with stock funds and money funds. hedge funds An investment fund that can undertake a wider range of investment and trading activities than other funds, but which is generally only open to certain types of investors specified by regulators. market liquidity In business, economics or investment, market liquidity is an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value. Pension funds Any plan, fund, or scheme which provides retirement income. transparency (figuratively) openness, degree of accessibility to view Free to share, print, make copies and changes. Get yours at www.boundless.com Bond Valuation

9. New York Stock Exchange Most bonds are not sold in centralized marketplaces, such as the New York Stock Exchange, leading to a lack of price transparency. Free to share, print, make copies and changes. Get yours at www.boundless.com Flickr. "All sizes | New York Stock Exchange | Flickr - Photo Sharing!." CC BY http://www.flickr.com/photos/proimos/5899896730/sizes/m/in/photostream/ View on Boundless.comCC BYhttp://www.flickr.com/photos/proimos/5899896730/sizes/m/in/photostream/View on Boundless.com Bond Valuation

10. Bond Brokers Bonds can be purchased through brokerages, such Fidelity Investments. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia. "Fidelity-Inv-Boston." CC BY-SA http://commons.wikimedia.org/wiki/File:Fidelity-Inv-Boston.JPG View on Boundless.comCC BY-SAhttp://commons.wikimedia.org/wiki/File:Fidelity-Inv-Boston.JPGView on Boundless.com Bond Valuation

11. Free to share, print, make copies and changes. Get yours at www.boundless.com Bond Valuation Which of the following statements regarding the bond purchasing process is correct? A) Some insurance companies are legally required to own bonds to match their liabilities. B) Individual investors can purchase bonds through a broker or a bond fund. C) All of these answers. D) Bond funds generally pay higher interest than certificates of deposits and money market accounts.

12. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ Bond Valuation Which of the following statements regarding the bond purchasing process is correct? A) Some insurance companies are legally required to own bonds to match their liabilities. B) Individual investors can purchase bonds through a broker or a bond fund. C) All of these answers. D) Bond funds generally pay higher interest than certificates of deposits and money market accounts.

13. Free to share, print, make copies and changes. Get yours at www.boundless.com Bond Valuation Which of the following is a reason bond markets may lack price transparency. A) There are a large number of debt issues outstanding. B) All of these answers. C) Bond markets sometimes lack a centralized exchange or trading system. D) In the US, Europe and Japan, bonds are traded in dealer-based over- the-counter markets.

14. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ Bond Valuation Which of the following is a reason bond markets may lack price transparency. A) There are a large number of debt issues outstanding. B) All of these answers. C) Bond markets sometimes lack a centralized exchange or trading system. D) In the US, Europe and Japan, bonds are traded in dealer-based over- the-counter markets.

15. Attribution Wikipedia. "Transparency (market)." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Transparency_(market)CC BY-SA 3.0http://en.wikipedia.org/wiki/Transparency_(market) Wikipedia. "market liquidity." CC BY-SA 3.0 http://en.wikipedia.org/wiki/market%20liquidityCC BY-SA 3.0http://en.wikipedia.org/wiki/market%20liquidity Wiktionary. "transparency." CC BY-SA 3.0 http://en.wiktionary.org/wiki/transparencyCC BY-SA 3.0http://en.wiktionary.org/wiki/transparency Wikipedia. "Bond (finance)." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Bond_(finance)CC BY-SA 3.0http://en.wikipedia.org/wiki/Bond_(finance) Wikipedia. "Broker." CC BY-SA 3.0 http://en.wikipedia.org/wiki/BrokerCC BY-SA 3.0http://en.wikipedia.org/wiki/Broker Wikipedia. "Bond fund." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Bond_fundCC BY-SA 3.0http://en.wikipedia.org/wiki/Bond_fund Wikipedia. "hedge funds." CC BY-SA 3.0 http://en.wikipedia.org/wiki/hedge%20fundsCC BY-SA 3.0http://en.wikipedia.org/wiki/hedge%20funds Wikipedia. "Pension funds." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Pension%20fundsCC BY-SA 3.0http://en.wikipedia.org/wiki/Pension%20funds Wikipedia. "bond funds." CC BY-SA 3.0 http://en.wikipedia.org/wiki/bond%20fundsCC BY-SA 3.0http://en.wikipedia.org/wiki/bond%20funds Free to share, print, make copies and changes. Get yours at www.boundless.com Bond Valuation