Your Questions About Advantages And Disadvantages Of Investing In Bonds

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Thomas asks…

What are the advantages and disadvantages of investing in the growth or income market?

Also, what is a bond?
I know that you have to pay taxes, but what else?
Please help me! My AP Eco teacher is having me write and essay and this is her first year teaching so she doesn’t explain things so well.

Thank-you, =)
which one do you think is better?…income or growth

financi4 answers:

If you have an instructor that does not explain things well, you need to rely on the book. Fortunately, I escaped college without too many of these situations.

A bond is a debenture, which is basically selling debt the same way that you would sell stock. If you sell stock, you promise the investor a portion of your earnings, equal to the percentage share that they own in your company. With a bond, you are promising to pay a fixed percentage of interest, based on the bond’s value (usually $1,000).

Growth and Income markets contain stocks that either have good growth potential (duh!) or provide a steady stream of dividends (income). Utilities used to fit the bill, but now you can find a variety of stocks used for this purpose, mostly based on recent performance or attitudes.

You pay taxes at your regular income tax rate on dividends, and at capital gains rates based on long-term share holds and sells. If you sell a share that you have held over one year, you pay capital gains rates on any gain. Conversely, you can deduct the loss on any sale up to $3,000 over and above any gain (i.e. Max $3k loss against regular income).

Capital gains rates can be 10% or 20%, depending on your total taxable income. Use software to figure that one out.

I wish you luck!

David asks…

bond ratings?

what r advantages and disadvantages of investing in junk bonds relative to investment grade bonds???

financi4 answers:

Investment grade bonds have a high probability (higher than kung bonds) of repaying the principal at maturity, i.e. The company issuing the bond not defaulting. The coupons (interest rate payments) are lower than for junk bonds.

Junk bonds pay higher coupons to compensate the investor for the risk of the company not repaying the loan.

I would not recommend to invest in a single junk bonds, but hold a reasonably divertsified portfolio. For investment grade bonds, especially AAA (for example US treasuries), single issues with an adequate maturity may be reasonable for investing in.

George asks…

What is the best way i can invest my money….I have $500.00 and am in my teens…bonds…saving accounts?

the stock market ? I don’t mind not being able to use the money for long periods of time. What are the advantages and disadvantages of different investments

financi4 answers:

If you can start one already, make a mutual fund.

A mutual fund is a long-term investment. The more money you put in, and the longer you keep it there, the higher your gains. Plus you do not have to monitor it in any way – the fund managers will do everything for you.

It is best to start a mutual fund as early as you can – preferably, as soon as you turn 18.

Robert asks…

can you help with my wife’s AAT college course?

First she needs to know the advantages/disadvantages of investing in stocks and shares.
Second she needs to know how the management of cash balances in the oublic sector is different to the management of cash balances in the private sector
And lastly…
She needs to look to raise money and has 3 options:
option 1: 5 year term loan of £10million with 10%interest paid quarterly
option 2: 5 year bond £10million with repayment of all £40million in year 10 with interest paid in year 10
option 3: a sale + lease which will generate £10million at an interest rate of 6% paid quarterly
she needs to discuss each of these options, what they mean, the advantages/disadvantages and recommend which is best.

If anyone can help…? Thank you in advance.

financi4 answers:

I cant

Donald asks…

please help me I am stuck on this question?

A sinking fund can be set up in one of two ways:
(1) The corporation makes annual payments to the trustee, who invests the proceeds in securities
(frequently government bonds) and uses the accumulated total to retire the bond
issue at maturity.
(2) The trustee uses the annual payments to retire a portion of the issue each year, either calling
a given percentage of the issue by a lottery and paying a specified price per bond or
buying bonds on the open market, whichever is cheaper.
Discuss the advantages and disadvantages of each procedure from the viewpoint of both the
firm and its bondholders.

financi4 answers:

Generally the benefits for the company is greater desirability of it debt in the market place.

The bondholders have a better guarantee that they will get their money back.

See below.

Now do your own research paper.

John asks…

sorry but more economics help :(?

I know this is a alot but please if you know just one list the number and the answr! anythin will help the person who posts the most answers i will give them 5 stars and best answer as soon as i get the chance to vote best answer!!! THANKS ALL WHO HELP ME!!

1. What are the advantages of organizing a buisness as a sole proprietership?
2. What are the main goverment restrictions on sole proprietorship?
3. Compare General and limited partnership would you rather be a general partner or a limited partner?
4. Describe a situation whick you have worked with one or more partners what are the advantages and disadvantages compared with working alone?
5. Why might a sale proprietor such as a hot dog vender decide to take on a new partner? why might he decide not to take on a new partner?
6. what advantages does incorporation give to the share holders and to the company?
7.What disadvantages does the incorperation give to the shereholders and to the company?
8.What is the econnomic impact of investing in the stock and bond markets?
9 How might you consider school to be a corperation?
10. What is the purpose of a nonprofit organization? List three non profit organizations.
11. What are the advantages of membership in a corperative?
12. Is school more like a franchise, a corperative, or a non profit organitazion? explain.

financi4 answers:

1) http://en.wikipedia.org/wiki/Sole_proprietorship
2) see above
3) http://en.wikipedia.org/wiki/General_partnership
4) where have you worked?
5) need to make an investment?
6) http://en.wikipedia.org/wiki/Incorporation_%28business%29
7) see above
8) think about this one
9) does the it hire any employees? Provide services? Etc
10)http://en.wikipedia.org/wiki/Non_profit
11) don’t understand question
12) you can do this one on your own

I don’t think you really need the help, but are trying to save time. If you are going to be tested on this stuff it is going to come back and bite you if you don’t take a few minutes and try to understand it yourself.

Steven asks…

please help?

39: Which of the following are not practiced market strategies?
Buying on margin

Selling short

Selling long

Options

40: ________ is an economic policy or doctrine that opposes government interference in or regulation of business or commerce beyond what is necessary for a free-enterprise system to regulate itself.
Communism

Laissez-faire

Fiscal policy

Free-enterprise policy

41: Which of the following is not a method that corporations use to raise capital?
issuing bonds or preferred stock

selling common stock

borrowing and using profits

selling goods and services directly to the public

34: Communism is an economic theory which stresses that the control of the means of producing economic goods in a society should reside in the hands of those who:
have the biggest economic advantage.

invest their labor for production.

have the most education.

are elected to office by the public.

78: A(n) _____ is an economic disadvantage, such as lower efficiency or higher costs.
diseconomy

noneconomy

net loss

unexpected loss

financi4 answers:

Do your own homework and stop wasting everyones time here. This isn’t the homework section.

Richard asks…

please help?

39: Which of the following are not practiced market strategies?
Buying on margin

Selling short

Selling long

Options

40: ________ is an economic policy or doctrine that opposes government interference in or regulation of business or commerce beyond what is necessary for a free-enterprise system to regulate itself.
Communism

Laissez-faire

Fiscal policy

Free-enterprise policy

41: Which of the following is not a method that corporations use to raise capital?
issuing bonds or preferred stock

selling common stock

borrowing and using profits

selling goods and services directly to the public

34: Communism is an economic theory which stresses that the control of the means of producing economic goods in a society should reside in the hands of those who:
have the biggest economic advantage.

invest their labor for production.

have the most education.

are elected to office by the public.

78: A(n) _____ is an economic disadvantage, such as lower efficiency or higher costs.
diseconomy

noneconomy

net loss

unexpected loss

financi4 answers:

Do your own homework. This is Yahoo Answers not Yahoo do all my homework for me.

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