Fitch IBCA	Moody's	Standard & Poor's	What the Rating Means
Investment Grade
AAA	Aaa	AAA	Highest credit quality
AA	Aa	AA	Very high credit quality
A	A	A	High credit quality
BBB	Baa	BBB	Good credit quality
Non-investment Grade
BB	Ba	BB	Speculative
B	B	B	Highly Speculative
CCC	Caa	CCC	High Default Risk
CC	Ca	C	High Default Risk
C	C	C	High Default Risk
DDD	C	D	Default
DD	C	D	Default
D	C	D	Default

1. What are Corporate Bonds and what are their tax advantages?

2. Are Corporate Bonds safer than stocks?

3. What is a Long Bond?

4. Why are the yeilds on Corporate Bonds higher than those for money market accounts?

5. What is a zero coupon bond?

6. How does a debenture differ from a secured bond?

7. What are U.S. Treasury Bills?

8. What is a Treasury Note?

9. How much should you invest in Bonds?

10.What is a Bond Swap?

1. Corporate Bonds are issued by companies as well as governments. Most Corporate Bonds pay a higher interest rate compared to bonds backed by the U.S. government, because government bonds ussually offer tax advantages. Jane Bryant Quinn, "Making the Most of Your Money," says you might want to buy a corporate bond if (1) You're investing with tax-deferred money in your retirement plan and want more interest than Treasuries pay. Corporate Bonds are fully taxable by fedreal, state and local governments. (2) You're in the 15% fedral tax bracket. At that level you want more, after tax, from taxable corporate bonds than from tax exempts. Quinn says the best way to invest in corporate bonds is via a good, diversified mutual fund.

2. Bonds are overall less risky compared to stocks because of their fixed interest payments and the rights bondholders have if the company declares bankruptcy. However, over a long period of time, investments that pay a fixed interest have a risk of falling, which leads to a decrease in the purchasing power of those payments. If interest rates fall, bond prices go up and vice versa. The fluctuation of a bonds price depends on maturity. The longer the maturity, the more sensitive it is to interest. The fluctuation bond prices in the market does not make a difference if you are planning on holding the bond to maturity. You will recieve cash flows throughout the life of the bond. Corporate bonds have lower, but fixed returns compared to stocks. In case of bankruptcy bondholders have a claim towards corporate funds over stockholders.

3. A Long Bond is a name used for a Treasury bond that matures in 30 years. This is the longest time to maturity that the Treasury offers.

4. Corporate Bonds tend to provide better yields than money market accounts. The reason for this is that when people buy bonds, they invest their money for a long period of time. An investor can sell a bond early, but whether he makes a profit or loss depends on whether the interest rates have risen or fallen. However, in a money market account deposits can be withdrawn at any time and their is no risk of loss. This flexibility, thus lower return on investment. Money market accounts are also insured, whereas bonds are not.

5. Zero-coupon bonds are sold at a low price and make no interest payments(coupon).When the bond matures, the investor gets the full face value($1,000) and the profit or loss is the difference between the price paid for the bond and its face value at maturity.

6. A debenture is a type of bond, but unlike regular bonds, they are not secured by the company's assets. Investors loan the their money to a company based on its reputation. If a company goes bankrupt, then all the investors who are holding bonds are paid off first and then the people holding debentures. Since debentures have a high risk, they pay more interest than bonds.

7. Treasury Bills are zero-coupon securities that often have maturities three months, six months or one year. Investing in a treasury bill is one of the safest investments that can be made as they are backed by the U.S. government and their maturities are so short that there is very little risk The minimum investment for a treasury bill is $10,000. They are sold at a discount and when they mature can be redeemed for their full face value. Interest on T-bills is exempt from taxes.

8. A treasury note is a debt security that is issued by the federal government. They mature anywhere from two to ten years. The notes are backed by the U.S. government and are issued in $1,000 and $5,000 denominations. They pay a fixed interest and any income is exempt from state and local taxes.

9. The answer depends on your age, income and investment objectives. A survey by the Wall Street Journal of Portfolio Strategists at thirteen top brokerage firms, showed that, on average, they recommended a diversified portfolio of assets that includes 31% bonds; 61% stocks; and 6% cash. Investors should review their portfolios frequently to make sure that their diversified portfolio continues to meet their investment objectives

10. A bond swap is where an investor chooses to sell a bond and purchase another with the proceeds from the sale. Fixed-income securities are excellent for swapping because it is often easy to find two bonds with similar features in terms of credit quality, coupon, maturity and price. In a bond swap, you sell one bond for another in order to take advantage of the current market or tax conditions.