Gemeinsames Audio

Face value is the amount you lend. Coupon rate is the interest rate. Maturity is when you get your money back. Yield is the actual return. The coupon is fixed, but the yield moves — this is where traders make money. There are different types of bonds. Government bonds are the safest with lower returns. Corporate bonds offer higher returns with more risk. Municipal bonds have tax benefits. Interest rates go up, bond prices go down. Interest rates go down, bond prices go up.