Table of Contents
   Prefacep. xiii
   Acknowledgmentsp. xvii
   The Basic Basicsp. 1
      The Life of a Bondp. 3
         First, What Is a Bond?p. 3
         How Bonds Are Issued and Tradedp. 3
         Key Terms for Bondsp. 4
      The Bond Market: An Overviewp. 7
         The Bond Market: An Overviewp. 7
         Bond Pricing: Markups and Commissionsp. 8
         How Bonds Are Sold: Dealers, Brokers, and Electronic Platformsp. 11
         Terms Used in Buying, Selling, and Discussing Bondsp. 17
      Volatility: Why Bond Prices Go Up and Downp. 25
         Interest Rate Risk, or a Tale of Principal Riskp. 25
         Credit Ratings: How Credit Quality Affects the Value of Your Bondsp. 31
         A Short History of Interest Ratesp. 43
         The Federal Reserve and Interest Ratesp. 48
         Summaryp. 50
      How Much Will I Earn, or Basic Bond Mathp. 51
         Bond Cash Flowsp. 51
         The Many Meanings of Yieldp. 55
         Total Returnp. 62
         Duration and Bond Price Volatilityp. 65
         Summaryp. 71
      What You Need to Know before Buying Bondsp. 73
         The Bond Market in the Financial Press and on the Internetp. 73
         The Treasury Marketp. 74
         "Yield Spreads" and Benchmarksp. 81
         Investinginbonds.com, FINRA.org/marketdata and EMMA.msrb.orgp. 85
         Summaryp. 94
   Individual Securitiesp. 97
      Treasuries, Savings Bonds, and Federal Agency Paperp. 99
         What Is Unique about Treasuries?p. 100
         Treasury Bills, Notes, and Bondsp. 102
         Inflation-Indexed Securitiesp. 105
         Buying Treasuries: Treasury Directp. 110
         Zero Coupon Bondsp. 112
         U.S. Savings Bondsp. 117
         Federal Agenciesp. 124
         Summaryp. 126
      Municipal Bondsp. 129
         What Is Unique about Municipal Bonds?p. 129
         Should I Buy Munis? (or, Taxable-Equivalent Yield)p. 130
         Credit Quality: General Obligation versus Revenue Bondsp. 133
         The Rise and Fall of Bond Insurancep. 136
         "Recalibrations" of Municipal Bond Ratingsp. 139
         Municipal Bond Pricingp. 147
         Shopping for Municipal Bonds Using the Internetp. 149
         Selecting Municipal Bondsp. 165
         Summaryp. 169
         Additional Referencesp. 170
         Appendix: The New York City Defaultp. 170
      Corporate Bondsp. 173
         What Is Unique about Corporate Bonds?p. 173
         Risk Factors of Corporate Bondsp. 175
         Corporate Bonds with Special Featuresp. 178
         Junk Bondsp. 181
         Shopping for Corporate Bonds Using the Internetp. 186
         Summaryp. 202
      Mortgage-Backed Securitiesp. 205
         Why GNMAs Are Uniquep. 206
         How Prepayments Affect GNMA Cash Flowsp. 211
         The Vocabulary of GNMA Returnsp. 213
         CMOs and Other Sons of GNMAp. 224
         Agency Backing of Mortgage-Backed Securities: Ginnie, Fannie, and Freddiep. 229
         Collateralized Debt Obligations (CDOs) and Collateralized Debt Swaps (CDSs)p. 232
         The Financial Crisis: 2007-2008p. 235
         Current State of the Mortgage-Backed and Asset-Backed Securities Marketp. 236
         Summaryp. 239
         Additional Referencesp. 241
      International Bondsp. 243
         The International Bond Market: An Overviewp. 244
         Currency Riskp. 248
         Emerging Markets Debt: Brady Bondsp. 250
         Buying Individual International Bondsp. 254
         Is There a Case for Investing in International Bonds?p. 260
         Obtaining Information on International Bondsp. 261
         Summaryp. 262
   Investing Through Fundsp. 263
      Bond Mutual Funds: An Overviewp. 265
         Differences between Bond Funds and Individual Bondsp. 265
         How Much Will I Earn?p. 267
         The Costs of Investing in Bond Fundsp. 273
         Why the NAV of Your Fund Will Go Up and Downp. 277
         Selecting, Buying, and Monitoring Bond Fundsp. 285
         Sources of Information Concerning Bond Fundsp. 288
         Taxes and Bond Fundsp. 297
         Summaryp. 299
      Money Market Funds and Tax-Exempt Bond Fundsp. 301
         Money Market Fundsp. 301
         Bond Funds Whose Price Goes Up and Down: "Plain Vanilla" and More Speculative Fundsp. 310
         Municipal Bond Fundsp. 314
         Summaryp. 324
      Taxable Bond Fundsp. 327
         Domestic "Plain Vanilla" Taxable Bond Fundsp. 328
         Treasury Inflation Protected Securities Fundsp. 336
         GNMA (and Other Mortgage) Fundsp. 339
         More Speculative Fundsp. 341
         Miscellaneous Fundsp. 354
         Summaryp. 358
      Closed-End Bond Funds, Exchange-Traded Funds (ETFs), and Unit Investment Trustsp. 361
         Closed-End Bond Fundsp. 361
         Summary: Closed-End Fundsp. 372
         Sources of Information on CEFsp. 373
         Exchange-Traded Fundsp. 374
         Advantages and Disadvantages of Bond ETFsp. 385
         Summary: Exchange-Traded Fundsp. 390
         Unit Investment Trustsp. 392
         Summary: Unit Investment Trustsp. 394
   Management of Bond Portfolios and Asset Allocationp. 395
      Management of Bond Portfoliosp. 397
         When Will I Need the Money?p. 398
         Portfolio Structuresp. 399
         Finding Attractive Buy Pointsp. 401
         Swapsp. 405
         Managing a Bond Portfolio for Total Returnp. 407
      Portfolio Allocationp. 411
         Portfolio Allocationp. 411
         Asset Allocationp. 413
         The Case for Bonds Revisitedp. 414
         The Current Environment and the Bond Marketp. 415
         Conclusionp. 419
   Indexp. 421