1. Chapter 11.4 notes
Bonds

2. Bonds long-term loans to gov’t or firms
Pay a stated rate of interest for certain # of yrs.
Rated from AAA to D – riskier bonds will be less expensive

3. Gov’t bonds called Treasuries – have different maturities
They are loans to the gov’t – help finance the deficit
Pay a small amount of interest
Considered virtually risk free
Interest earned is taxed

4. Municipal bonds Loans to local and state gov’ts
interest earned is tax free
Generally low-risk

5. Corporate Bonds Loans to corporations
Usually pay more than gov’t bonds
High risk – called junk bonds