How much does a bond cost ?

Question

Cost of various bonds?

Answer 1

I love bonds.....

Anyways...

A bond is set at value of par (fancy for 100) Most bonds are in increments of $1000 but some are different, so always check the cusip (fancy for number of bond issue and the details)

So if a bond by xyz corp. was yielding 5.5% and was priced at 100 you would pay....

$1000. This would give you 5.5% until that it matured when that your original thousand dollars would be given back upon redemption.

Now that's the easy part.  Companies (and governments) go through tough times and good times and their debts (bonds) can go up and down based on investors projections of their success or failure.  So if a solid company like General Electric has some 8% bonds out there that are going to be redeemed in 2010 you will definitely pay more than 100 for them.  Maybe 102 or more.  This will effect the yield because you are paying more for the bond.

Right now Chrysler has serious money problems and people think that they might go belly up.

You can buy Chrysler paper between 40 to 50.

That means forty to fifty cents on the dollar.  If they turn things around you get a great return.  If they don't you have yourself some expensive toilet paper!

Good luck!