Your Questions About Investing In Bonds

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Donald asks…

Should I use student loans to invest in bonds?

I’m thinking about taking out student loans to invest in bonds that will mature before I graduate. Are there any possible problems with this strategy? The loans will not require repayment till 6 months after graduatation, and as it stands, I do not need to take the loans to pay for school.

Justin answers:

Depends on your credit if the interest rate on the student loans will be higher then the gain the the bonds.

Robert asks…

how much money is invested in bonds and how much money is invested in certificates of deposit?

Susan purchased municipal bonds yielding 10% annually and certificates of deposit yielding 13% annually. If Susan’s investments amounted to $12,868 and the annual income is $1604.23. how much money is invested in bonds and how much money is invested in certificates of deposit?

Justin answers:

Let X= bonds
Let Y=CD

X + Y = 12,868

X * 0.10 + Y * 0.13 = 1604.23

Solve the simultaneous equations for X and Y.

Joseph asks…

How do you find out if a corporate bond is first debiture and colatoralized?

Interested in investing in bonds want more than surface data to the details on the bond. Where can I find the true details of a bond?
Is there anywhere on the Internet to check the prospectus?

Justin answers:

In the prospectus

Chris asks…

Is depositing fixed the same as investing in bonds?

I am making a case assignment for my uni, however there is one ‘tip’ in there that I do not understand. I have to come up with three lending and borrowing scenarios, and it say:

‘Make at least one scenario dependent on either not borrowing or not depositing fixed.’

I already made one with investing in governmental bonds, is that already some sort of depositing fixed?

English is not my first language that is why it is a bit difficult to understand! Hope someone can help me.

Justin answers:

Opinion:
Investing in a government bond is a fixed deposit (in my mind).
Just like a CD (certificate of deposit) you would buy and hold till maturity.

Some people buy and sell the bond market – that’s completely different.

Daniel asks…

How does bonds or treasury bonds work?

If I have a 100 for example and I want to invest in bonds or tresury bonds im not sure which is it or there the same. But how long would it take for me to make money from that 100. When can I withdraw the money? Where do I go to get the money? How much money can I make from that 100? And your experiences or advice would help. How risky is it? Usually do people gain or lose money?

Justin answers:

The treasury bonds thus give you two different opportunities. If you are not interested in trading in the bond market, just hold on to your bond and quietly collect your coupon interest. If you are a bounty hunter, who wants more and is interested in trading, the bond market is open for you! I hope this article has given you some insight into how do treasury bonds work for you! Treasury bonds are the safest bet in recession times as the risk factor is very low. Thus if you are looking for a long term investment with modest but assured returns

Ken asks…

Is it good for the economny if we buy bonds issued by the Treasuery Department?

I have street business knowledge, but no hardcore economics knowledge. If the people invest in bonds that are issued by the U.S government will it help us out of the biggest deficit in history?

Justin answers:

First — very few individuals invest in bonds. The bond market is controlled by institutional investors. So if individuals buy bonds, there will be very little effect.

Second — how does increasing the debt of the government decrease the deficit? If the government buys more bonds, it will go deeper into debt, which increases the deficit.

There are two ways to decrease the deficit: Spend less or gather more taxes.

Michael asks…

If a corporation invests in municipal bonds, is the interest they receive on the investment tax-free?

I understand that if an individual invests in municipal bonds, they do not have to pay federal income tax on the interest, and usually do not have to pay state income tax on the interest either. But what if a corporation buys municipal bonds, do they have to pay federal income tax on the interest? And do they have to pay state income tax on the interest?

Thank you advance for your generous help.

Justin answers:

It depends on the bond. Check with the broker to get details on how much is tax-exempt. Regardless of the filing entity, tax treatment will be the same. Another words, if an individual is exepmt, Corps, P-ships, and trusts are also exempt.

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