# 1 Primary vs. Secondary Bonds

Question 1

Primary Bonds

Answer 1

Newly Issued Bonds

Question 2

Secondary Bonds

Answer 2

Bonds that are bought and sold that were previously held

Question 3

Maturity

Answer 3

The time it takes to get the principle originally invested back

Question 4

Face Value

Answer 4

“Par Value” Value of the bond when it is first issued

Question 5

Coupon Rate

Answer 5

aka “Yield” The interest paid to the investor. This usually occurs twice a year; The coupon rate for a bond is fixed regardless of the change in interest rates and bond prices

Question 6

Relationship between interest rates and Bond Prices

Answer 6

Inverse relationship

Question 7

Bond Discount

Answer 7

If interest rates increase, then the price of your bond that you are holding decreases. Why? Because why settle for your little ass yield, when I have this new higher yield? You gotta give someone a deal.

Question 8

Premium vs. Discount

Answer 8

Premium if interest rates decreases and discount if interest rates increase