Do You Know Anything About Municipal Bonds? If you don't take this quiz. |
||||
| By: Michael Joel Haworth | ||||
What is the best bond rating you can get? a) Which ever one gives me the best money b) Aaa c) Whatever my investment adviser tells me is a good one The right answer is B. this will be the top rating you will find in any municipal bond. This means they'll have a better chance of paying out. Relying on your investment adviser is ok, but you still need to be properly educated so that you know that your investor knows what he is talking about. There have been a lot of times when an adviser told investors what they should do, and they did it,and lost way to much money in the process. Don't let this happen to you. What is the bond rating based on? a) How many I buy? b) Not sure c) The credit worthiness of the city who issued it The correct answer is C. if the city has better the credit, the better the rate of the bond. But if the rating is low, it could pose a high risk for you, meaning that there might be a lower chance that the bond will pay off in the longer run. However, you will likely not get a close value that you paid for in the beginning, because of the decreasing value that its perceived. How are these rates determined? a) I thought it was the credit worthiness of the city. b) The economic growth, and stability of the city c) I am not sure what you mean The right answer is B. If the city is more stable, and if it has a higher growth rate, that will determine their credit worthiness for repayment of a bond. The worst rated bond usually comes from cities that doesn't have either growth, or a negative growth, and are much unstable in the terms of finance. This would be a bond you don't want. If you remember that any kind of investment carries a risk factor, some could be greater than others. Because some people have greater success in investing, doesn't mean that you can run full tilt, and be richer. Just think of it as a lottery. The odds are probably better, but there's still a risk of gaining nothing. Do make sure that you do your research before you invest in anything. After you've taken this quiz, and learned what it means for you, you'll have a much better understanding of how to properly invest in bonds. Make sure that they have a good rating before you do anything. Make sure you also do your research on the city in which issues it, see if they are stable, and that has a positive growth. If not then don't invest. |
||||
| Article Source: http://yourfinance.co.za | ||||
|
||||
|
||||
| © 2012 yourfinance.co.za |
