Bond Investments

Instructions: Use the Internet to research information on the following types of bonds:
 Corporate
 Federal Agency
 Municipal
 Treasury
You will need to include the definition and one example of each type of bond to complete the chart below. Use the following websites
to help guide your research on bond investments:

http://www.investopedia.com/articles/bonds/07/agency_bonds.asp

www.municipalbonds.com

www.treasurydirect.gov

Type of Bond Federal Agency Bonds Municipal Bond Treasury Bond

They are a part of the Issued by state and Used to finance

Definition govt. the money is used local govts. debt of us govt. no
to fund projects. or low default risk.
Federal housing Berryville Ark Sch Savings bond.
Example 1 administration (FHA) Dist No 27 Constr
Ser B
 Bond Rating Agencies

Instructions: Access the website: www.municipalbonds.com/education/read/67/understanding-bond-ratings to locate the bond rating

classifications from the three different agencies (Moody’s, Standard and Poor’s, and Fitch’s). Describe (in your own words) each
bond rating classification from the website.

Moody’s Ratings Standard and Poor’s Fitch’s

Aaa High return, AAA Highest rating, AAA Highest rating,
lowest risk, lowest risk, lowest risk,
highest highest highest
creditworthiness creditworthiness creditworthiness
Aa Very low risk, AA Very low risk, AA Very low risk,
very strong very strong very strong
creditworthiness creditworthiness creditworthiness
A Above average A Strong A Low risk, strong
creditworthiness, creditworthiness, creditworthiness
low risk low risk
Baa Average BBB Adequate BBB Moderate risk,
creditworthiness, creditworthiness, adequate
lowest investment lowest investment creditworthiness,
grade, moderate grade, moderate lowest investment
risk risk grade
Ba Below average BB Inadequate BB High risk,
creditworthiness creditworthiness inadequate
creditworthiness
B Weak B Weak B Very high risk,
creditworthiness creditworthiness weak
creditworthiness
Caa Very weak CCC Very weak CCC Extremely high
creditworthiness creditworthiness risk, very weak
creditworthiness
 Ca Extremely low CC Extremely low CC Almost imminent
creditworthiness creditworthiness risk, extremely
low
creditworthiness
C Highest risk, C Highest risk, C Imminent risk,
weakest lowest highest rating,
creditworthiness creditworthiness lowest
creditworthiness.

Bond Investments Summary:

After you have completed your research, answer the following questions:
1.) Which type of bond(s) would you choose to invest in and why? Treasury bonds. I can get a savings bond for my children.
2.) Which bond rating classifications will you focus on for your investment portfolio? At least Aa, but preferably Aaa.
3.) Which rating agency would you use to help evaluate your bond investments? Moody’s ratings.