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Universities » University of South Carolina (SC.. » FINA - Finance » 369 - PERSONAL FINANCE » Flash Cards

TEST 3 - Flashcards

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Class:FINA 369 - PERSONAL FINANCE
Subject:Finance
University:University of South Carolina - Columbia
Term:Fall 2011
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common stock are a form of equity. each share of stock represents a fractional ownership position in a corporation. equal participation in the corporation, equal vote and voice in management. has no maturity date.

TAXES ARE PAID ON DIVIDENDS
Bonds bonds are liabilities. gverments and corporations give out bonds that pay a stated return called interest. tipically paid every 6 months plus the return of the face value of the bond. a bond can be sold before maturity.
usually 20 years

Call feature: not all have it. if Co. cant pay interest can pay early bond.
Preferred stock these are hybrid securities that have both stock and bond characteristics. Preferred stock are issue as stoc and therefore represent an equity in a corporation. These have a stated dividend that are paid before common stuck get paid. As bond they pay dividends as they pay when the time of purchase.
first to receive money in liquidation
convertible bonds these provide the fixed income benefits of a  bond while offering the price appreciation potential of common stock.
it can be converted to shares
has to wait certain time

Generated by Koofers.com
mutual funds are org. that invests in and professionally manages a diversified portfolio of securities.These sell shares to investors, who then become part owners of the funds securities portfolio.
+ diverse + convinient
Primary Market in the PM, new securities are sold to the public and one party of the transaction is always the issuer. A security is sold in the PM just once, when is first issued. investment bankers are involved in this market.
Secondary Market these are where the old securities are bought or traded between investors. these permit investors to execute transactions among themselves. these do not generate cash for the issuer

security exchange: buyers-sellers brought together to execute the trade

nasdaq market: electronic platform to execute trade
OTC over the counter market deals in smaller, unlisted securities.
Generated by Koofers.com
Bid Price and Ask Price these represent respectively the highest price at which the security is offered for purchase a given security and the lowest price at which the security is offered for sale in the dealers market.
SEC securities and exchange commission: an agency of the fed. gov. that regulates the disclosure of information about securities and generally oversees the operation of the securities exchanges and markets.

established to avoid another depression


bull market a market condition normally associated with investor optimism, economic recovery, and expansion; characterized by generally rising securities prices.
bear market a condition of the market typically associated with investor pessimism and economic slowdown; characterized by generally falling securities prices.
Generated by Koofers.com
SIPC securities investor protection corp. is an org. that protect investors against financial failure of brokerage firms, much as the FDIC protects depositors against bank failures.  its a non profit org. authorized by the securities investors act of 1970. NOT an agency of the US government

does not insure against bad investment advice or broker fraud.
if u have a dispute u go to arbitration

a full service broker a broker, in addition, to executing clients transactions, offers a full array of brokerage services. registered with SEC

+ expensive
online broker typically a discount broker through which investors can execute trades electronically through a commercial service or on the internet broker.

- expensive than full broker
odd lot  a security transaction made on a quantity of fewer than 100 shares of stock

bc the purchase or sale of odd lot requires additional processing an added fee is charge onto normal commission charges
Generated by Koofers.com
round lot a security transaction that represents a quantity of 100 shares or multiple there of.


ARBITRATION a procedure used to settle disputes between a brokerage firm and its clients; both sides present their position to a board of arbitration which makes a final and often binding decision on the matter.
Buying and Selling orders Market order: an order to buy or sell a security at the best price available at the time it is placed.

-Limit order:an order to either buy a security at a specified or lower price or to sell a security at or above a specified price.

-stop order: an order to sell stock when the market price reaches or drops below a specified price
all protects investors against rapid declines in prices.
DIJA the most widely followed measure of stock market performance, consists of 30 blueship stocks listed mostly on the NYSE
Generated by Koofers.com
S&P 500 the standard and poor indexes are similar to the dow jones aveg in that both are used to capture the overall performance of the market. the S&P uses a lot more stocks (500). DIJA uses 30. they are also large stock.

is an index dow jones is an average
Wilshire 500 an index of the total market value of the approx. 6000-7000 or so most actively traded stocks in the U.S. accounts for 98-99% of all market.
business risk the degree of uncertainty associated with the firms cash flow and with its subsequent ability to meet its operating expenses.
market risk a type of risk associated with the price volatility of a security
Generated by Koofers.com
financial risk a type of risk associated with the mix of debt and equity financing used by the issuing firm and its ability to meet its financial obligations.
purchasing power risk a type of risk resulting from possible changes in price levels, that can significantly affect investment returns.

inflation and value of the dollar affects this
interest rate risk a type of risk resulting from changing market interest rate that mainly affects fixed income securities.  such as preferred stock, CD etc.
liquidity risk a risk associated with the inability to liquidate an investment conveniently and at a reasonable price.
Generated by Koofers.com
event risk the risk that some major, unexpected event will occur that leads to a  sudden and substantial change in the value of an investment
return from investing any investment vehicle- wether it is a share of stock, a bond, a piece of real state, or a mutual fund, has two basic form of return: current income and capital gains.

CG: from selling whole at a higher price

Current income: received with some degree of regulatory. ex rent, interest from bonds.
the risk return trade off the amount of risk associated with a   given investment vehicle is directly related to its expected return. if you want a higher return you have to take a higher risk.
blue chip stock a stock generally issued by companies expected to provide an uninterrupted stream of dividends and good long term growth prospects.

coke, exxon

big, safe
Generated by Koofers.com
growth stock a stock whose earnings and market price have increased over the time a rate well above average.
capital gains
not dividends
tech stock a stock that represents the technology sector of the market
income stock a stock whose appeal is the dividends it pays out; offers dividend payments that can be expected to increase over the time.
speculative stock stock that is purchased on little more that the hope that its price per share will increase. high risk

Generated by Koofers.com
cyclical stock stock whose price movements tend to parallel the various stages of the business cycle.
defensive stock stock whose price movements are usually contrary to movements in the business cycle.
coupon bond feature that defines the annual interest income the issuer will pay the bondholder.
mortgage bond a bond secured by a claim on real assets, such as a manufacturing plant.
Generated by Koofers.com
sinking fund a bond provision specifying the annual repayment schedule to be used in paying off the issue.  it basically describes how  a bond will be paid off over time.
call feature bond feature that allows the issuer to retire the security prior to maturity debenture an unsecured bond issued on the general credit of the firm
ETF exchange traded fund a mutual fund that trades as a listed security; usually structured as an index fund that is set up to match the performance of certain market segment.

can be sell or traded as a common stock (closed end fund) or back to the company (open end fund)
mutual funds advantages diversification
professional management
financial returns
convenience
Generated by Koofers.com
load fund a fund that charges a fee at time of purchase
no load fund a fund on which no transaction fees are charge
back end load a commission charged for redeeming fund shares
front end load charges a commission when the shares of the fund are purchased.
Generated by Koofers.com
12(b)-1 an annual fee that's supposed to be used to offset the promotion and selling expenses
management fees a fee paid to the professional money managers who administer a mutual funds portfolio
Growth funds the objective is capital appreciation. They invest principally in common stocks with above average growth potential.  long term investment vehicle.
index fund rather than trying to beat the market, index funds simply try yo amtch the market. its based on buy and hold policy. inles the targeted market index alters  its market basket of securities.
Generated by Koofers.com
sector fund restricts its investment to a particular sector of the market.
asset allocation fund these funds spread investors money across all different types of markets.
SS ages for benefit for anyone  born later than 1960 the SS administration defines as full retirement age as age 67. if born before 1960 your full retirement age is between 65 and 67.
noncontributory pension plan A pension plan in which the employer pays the total cost of the benefits
Generated by Koofers.com
contributory pension plan a pension plan in which the employee beas part of the cost of the benefits
defined benefit plan a pension plan in which the formula for computing benefits is stipulated in its provisions. %*avg salary of x last years* numbers of yrs worked in company
defined contribution plan a pension plan specifying the contributions that both employer and employee must make; it makes no promises concerning the size of the benefits at retirement.
401(k) plan an agreement by which part of the convered employee's pay is withheld and invested in some form of investment; taxes on the contributions and the account earnigs are deferred unitl the funs are withdrawn.
Generated by Koofers.com
Keogh plan an account to which self-employed persons may make specified payments that may be dedcuted from taxable income; earnings also accure on a tax-deferred basis.

up to 25% of earned income
self-employment works like a traditional IRA
IRA individual retirement plan arrangement: a retiement plan, open to any working american, to which a person may contribute a specified amount each year.
 up to $5000 per year.
cant do it with spouse
59 1/2 minimum. if take out before taxed 10% on every $
exceptions: permanent or totally disable. bought a house. pay debts
roth IRA available since 98'. they can be opened by couples filing jointly with adjusted gross incomes of up to 166k whether they have other  retirement plans or not.

up to 5000$ a yr. no tax benefits.
no age limit
income limits are significantly higher
state people planning means anticipating the psychological and financial needs of those you love, and providing adequate resources to ensure continuation of their way of life. good for individuals with children who are minors.
Generated by Koofers.com
state assett planning this is essential for anyone with an state exceeding $1 mill in 2011 under current law. 
probate state the real and personal property owned by a person that can be transfered at death.
gross state all property that might be subject to federal estate taxes on a persons death.
intestacy the situation that exists when a person dies without a valid will
Generated by Koofers.com
testator the person who makes a will that provides for the disposition of property at his or her death.
requirements for a valid will

mental capaciy

freedom of choice

proper execution
codicil a document that legally modifies a will without revoking it.
revocation of a will

his health or financial circumstances change significantly.

 

births, deaths, marriages, or divorces alter the operative circumstances

 

the testator moves to a state other than where the will was executed

 

an executor, trustee or guardian can no longer serve

substantial changes occur in the tax law
Generated by Koofers.com
letter of last instructions an informal memorandum that is separate from a will and contains suggestions or recomendations for carrying out a decendets, wishes.
executor the personal representative of an estate designated in  the decedents will.
durable POA

durable power of attorney for financial matters: legal doc. that authorizes another person to take over someones financial affairs and act on his or her behalf.

 
living will a doc that precisely states the treatments a person wants if he or she becomes terminally ill
Generated by Koofers.com
durable POA for health care legal doc authorizes an individual to amke health decisions on behalf of the principal when the principal is unable to make such decisions. also called advanced directive for health care.
joint tenancy with right of suvivorship

a type of ownership by two or more parties, with the suvivors continuing to hold all such property on the death of one or more of the owners.

 

Right of suvivorship: the right of surviving joint owners of property to receive title to the deceased joint owners interest in the property.

tenancy by the entirety a form of ownership by husband and wife, recognized in certain states in which property automatically passes to the surviving spouse.
tenancy in comon a form of co-ownership under which there is no right of suvivorship and each co-owner can leave his or her share to whomever he or she desires.
Generated by Koofers.com
trust a legal relationship created when one party transefers property to a second party for the benefit of third parties.
gift tax a tax levied on the value of certain gifts made during the givers life time
gift tax exclusions Anual exclusions: the gift tax law allows a person to give gifts- present interest with no strings attached- up to a specified annual amount per calendar year to any number of recipients.

up to 13,000 per person per year
spouses up to 26K and lifetime exlusion up to 5 mill.
interest dividends check mailed to you
Generated by Koofers.com
vesting how long you have to be in the company before you can gettheir money. usually at least 4 to 5 yrs.
graded vesting first yr 20% 2nd yr 40% etc
Social Security they might raise the age
can be claimed and then suspended. the older u claim it the higher it is.
70 yrs is the max.

mistakes for retirement investing too little during retirement
retiring before you need to
divorce war
overpaying mortgage
cashing out 401(k) 10% penalty (remember to max match %)
paying needless fund fees.

Generated by Koofers.com
dying without a will depends on the state
unmarried, no kids = parents
married, no kids = spouse
married and kids= half and half
will  get filled in court
public after death
not joint

things that do not pass through will:
CDs, IRAs, CDs, Bank accounts, LI policy
odd SC laws to sell a casket have to provide full funeral services

funeral homes have to accept funeral delivery of caskets from other places

cant be cremated unless family agrees. unless prepaid
stock only sold in one place
has to be bough via broker
Generated by Koofers.com
zero coupon bonds no interest payment
usually a very safe investment.
equipment bonds backed up by equipment.
fund family vanguard, merrill lynch etc
open end funds much bigger category. infinite number of stocks and taking money. if too big might close for new inverstors.  but no close end.
Generated by Koofers.com
NAV Net asset value is the price per share of stock
SEP simplified employee pension: is a variation of IRA in the U.S applied to business owners and their employees.
Secundary broker market
Secundary broker market
Generated by Koofers.com
secondary dealer market nasdaq + OTC market

buyer and seller never met. people buy and sell through a securities dealer.

bid price and ask price

pink sheets are unregulated
interest rates and the bond prices high interest rates, low bond prices and opposite

you can buy at high interest rate  a low bond and sell it at a lower interest rate and a higher price.
Generated by Koofers.com

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 common stockare a form of equity. each share of stock represents a fractional ownership position in a corporation. equal participation in the corporation, equal vote and voice in management. has no maturity date.

TAXES ARE PAID ON DIVIDENDS
 Bondsbonds are liabilities. gverments and corporations give out bonds that pay a stated return called interest. tipically paid every 6 months plus the return of the face value of the bond. a bond can be sold before maturity.
usually 20 years

Call feature: not all have it. if Co. cant pay interest can pay early bond.
 Preferred stockthese are hybrid securities that have both stock and bond characteristics. Preferred stock are issue as stoc and therefore represent an equity in a corporation. These have a stated dividend that are paid before common stuck get paid. As bond they pay dividends as they pay when the time of purchase.
first to receive money in liquidation
 convertible bondsthese provide the fixed income benefits of a  bond while offering the price appreciation potential of common stock.
it can be converted to shares
has to wait certain time

 mutual fundsare org. that invests in and professionally manages a diversified portfolio of securities.These sell shares to investors, who then become part owners of the funds securities portfolio.
+ diverse + convinient
 Primary Marketin the PM, new securities are sold to the public and one party of the transaction is always the issuer. A security is sold in the PM just once, when is first issued. investment bankers are involved in this market.
 Secondary Marketthese are where the old securities are bought or traded between investors. these permit investors to execute transactions among themselves. these do not generate cash for the issuer

security exchange: buyers-sellers brought together to execute the trade

nasdaq market: electronic platform to execute trade
 OTCover the counter market deals in smaller, unlisted securities.
 Bid Price and Ask Pricethese represent respectively the highest price at which the security is offered for purchase a given security and the lowest price at which the security is offered for sale in the dealers market.
 SECsecurities and exchange commission: an agency of the fed. gov. that regulates the disclosure of information about securities and generally oversees the operation of the securities exchanges and markets.

established to avoid another depression


 bull marketa market condition normally associated with investor optimism, economic recovery, and expansion; characterized by generally rising securities prices.
 bear marketa condition of the market typically associated with investor pessimism and economic slowdown; characterized by generally falling securities prices.
 SIPCsecurities investor protection corp. is an org. that protect investors against financial failure of brokerage firms, much as the FDIC protects depositors against bank failures.  its a non profit org. authorized by the securities investors act of 1970. NOT an agency of the US government

does not insure against bad investment advice or broker fraud.
if u have a dispute u go to arbitration

 a full service brokera broker, in addition, to executing clients transactions, offers a full array of brokerage services. registered with SEC

+ expensive
 online brokertypically a discount broker through which investors can execute trades electronically through a commercial service or on the internet broker.

- expensive than full broker
 odd lot a security transaction made on a quantity of fewer than 100 shares of stock

bc the purchase or sale of odd lot requires additional processing an added fee is charge onto normal commission charges
 round lota security transaction that represents a quantity of 100 shares or multiple there of.


 ARBITRATIONa procedure used to settle disputes between a brokerage firm and its clients; both sides present their position to a board of arbitration which makes a final and often binding decision on the matter.
 Buying and Selling ordersMarket order: an order to buy or sell a security at the best price available at the time it is placed.

-Limit order:an order to either buy a security at a specified or lower price or to sell a security at or above a specified price.

-stop order: an order to sell stock when the market price reaches or drops below a specified price
all protects investors against rapid declines in prices.
 DIJAthe most widely followed measure of stock market performance, consists of 30 blueship stocks listed mostly on the NYSE



 S&P 500the standard and poor indexes are similar to the dow jones aveg in that both are used to capture the overall performance of the market. the S&P uses a lot more stocks (500). DIJA uses 30. they are also large stock.

is an index dow jones is an average
 Wilshire 500an index of the total market value of the approx. 6000-7000 or so most actively traded stocks in the U.S. accounts for 98-99% of all market.
 business riskthe degree of uncertainty associated with the firms cash flow and with its subsequent ability to meet its operating expenses.
 market riska type of risk associated with the price volatility of a security
 financial riska type of risk associated with the mix of debt and equity financing used by the issuing firm and its ability to meet its financial obligations.
 purchasing power riska type of risk resulting from possible changes in price levels, that can significantly affect investment returns.

inflation and value of the dollar affects this

 interest rate riska type of risk resulting from changing market interest rate that mainly affects fixed income securities.  such as preferred stock, CD etc.
 liquidity riska risk associated with the inability to liquidate an investment conveniently and at a reasonable price.
 event riskthe risk that some major, unexpected event will occur that leads to a  sudden and substantial change in the value of an investment
 return from investingany investment vehicle- wether it is a share of stock, a bond, a piece of real state, or a mutual fund, has two basic form of return: current income and capital gains.

CG: from selling whole at a higher price

Current income: received with some degree of regulatory. ex rent, interest from bonds.
 the risk return trade offthe amount of risk associated with a   given investment vehicle is directly related to its expected return. if you want a higher return you have to take a higher risk.
 blue chip stocka stock generally issued by companies expected to provide an uninterrupted stream of dividends and good long term growth prospects.

coke, exxon

big, safe
 growth stocka stock whose earnings and market price have increased over the time a rate well above average.
capital gains
not dividends

 tech stocka stock that represents the technology sector of the market
 income stocka stock whose appeal is the dividends it pays out; offers dividend payments that can be expected to increase over the time.
 speculative stockstock that is purchased on little more that the hope that its price per share will increase. high risk

 cyclical stockstock whose price movements tend to parallel the various stages of the business cycle.
 defensive stockstock whose price movements are usually contrary to movements in the business cycle.
 couponbond feature that defines the annual interest income the issuer will pay the bondholder.
 mortgage bonda bond secured by a claim on real assets, such as a manufacturing plant.
 sinking funda bond provision specifying the annual repayment schedule to be used in paying off the issue.  it basically describes how  a bond will be paid off over time.
 call featurebond feature that allows the issuer to retire the security prior to maturity debenture an unsecured bond issued on the general credit of the firm
 ETFexchange traded fund a mutual fund that trades as a listed security; usually structured as an index fund that is set up to match the performance of certain market segment.

can be sell or traded as a common stock (closed end fund) or back to the company (open end fund)
 mutual funds advantagesdiversification
professional management
financial returns
convenience
 load funda fund that charges a fee at time of purchase
 no load funda fund on which no transaction fees are charge
 back end loada commission charged for redeeming fund shares
 front end loadcharges a commission when the shares of the fund are purchased.
 12(b)-1an annual fee that's supposed to be used to offset the promotion and selling expenses
 management feesa fee paid to the professional money managers who administer a mutual funds portfolio
 Growth fundsthe objective is capital appreciation. They invest principally in common stocks with above average growth potential.  long term investment vehicle.
 index fundrather than trying to beat the market, index funds simply try yo amtch the market. its based on buy and hold policy. inles the targeted market index alters  its market basket of securities.
 sector fundrestricts its investment to a particular sector of the market.
 asset allocation fundthese funds spread investors money across all different types of markets.
 SS ages for benefitfor anyone  born later than 1960 the SS administration defines as full retirement age as age 67. if born before 1960 your full retirement age is between 65 and 67.
 noncontributory pension planA pension plan in which the employer pays the total cost of the benefits
 contributory pension plana pension plan in which the employee beas part of the cost of the benefits
 defined benefit plana pension plan in which the formula for computing benefits is stipulated in its provisions. %*avg salary of x last years* numbers of yrs worked in company
 defined contribution plana pension plan specifying the contributions that both employer and employee must make; it makes no promises concerning the size of the benefits at retirement.
 401(k) planan agreement by which part of the convered employee's pay is withheld and invested in some form of investment; taxes on the contributions and the account earnigs are deferred unitl the funs are withdrawn.
 Keogh planan account to which self-employed persons may make specified payments that may be dedcuted from taxable income; earnings also accure on a tax-deferred basis.

up to 25% of earned income
self-employment works like a traditional IRA
 IRAindividual retirement plan arrangement: a retiement plan, open to any working american, to which a person may contribute a specified amount each year.
 up to $5000 per year.
cant do it with spouse
59 1/2 minimum. if take out before taxed 10% on every $
exceptions: permanent or totally disable. bought a house. pay debts
 roth IRAavailable since 98'. they can be opened by couples filing jointly with adjusted gross incomes of up to 166k whether they have other  retirement plans or not.

up to 5000$ a yr. no tax benefits.
no age limit
income limits are significantly higher

 state people planningmeans anticipating the psychological and financial needs of those you love, and providing adequate resources to ensure continuation of their way of life. good for individuals with children who are minors.
 state assett planningthis is essential for anyone with an state exceeding $1 mill in 2011 under current law. 
 probate statethe real and personal property owned by a person that can be transfered at death.
 gross stateall property that might be subject to federal estate taxes on a persons death.
 intestacythe situation that exists when a person dies without a valid will
 testatorthe person who makes a will that provides for the disposition of property at his or her death.
 requirements for a valid will

mental capaciy

freedom of choice

proper execution

 codicila document that legally modifies a will without revoking it.
 revocation of a will

his health or financial circumstances change significantly.

 

births, deaths, marriages, or divorces alter the operative circumstances

 

the testator moves to a state other than where the will was executed

 

an executor, trustee or guardian can no longer serve

substantial changes occur in the tax law

 letter of last instructionsan informal memorandum that is separate from a will and contains suggestions or recomendations for carrying out a decendets, wishes.
 executorthe personal representative of an estate designated in  the decedents will.
 durable POA

durable power of attorney for financial matters: legal doc. that authorizes another person to take over someones financial affairs and act on his or her behalf.

 

 living willa doc that precisely states the treatments a person wants if he or she becomes terminally ill
 durable POA for health carelegal doc authorizes an individual to amke health decisions on behalf of the principal when the principal is unable to make such decisions. also called advanced directive for health care.
 joint tenancy with right of suvivorship

a type of ownership by two or more parties, with the suvivors continuing to hold all such property on the death of one or more of the owners.

 

Right of suvivorship: the right of surviving joint owners of property to receive title to the deceased joint owners interest in the property.

 tenancy by the entiretya form of ownership by husband and wife, recognized in certain states in which property automatically passes to the surviving spouse.
 tenancy in comona form of co-ownership under which there is no right of suvivorship and each co-owner can leave his or her share to whomever he or she desires.
 trusta legal relationship created when one party transefers property to a second party for the benefit of third parties.
 gift taxa tax levied on the value of certain gifts made during the givers life time
 gift tax exclusionsAnual exclusions: the gift tax law allows a person to give gifts- present interest with no strings attached- up to a specified annual amount per calendar year to any number of recipients.

up to 13,000 per person per year
spouses up to 26K and lifetime exlusion up to 5 mill.
 interest dividendscheck mailed to you
 vestinghow long you have to be in the company before you can gettheir money. usually at least 4 to 5 yrs.
 graded vestingfirst yr 20% 2nd yr 40% etc
 Social Securitythey might raise the age
can be claimed and then suspended. the older u claim it the higher it is.
70 yrs is the max.

 mistakes for retirementinvesting too little during retirement
retiring before you need to
divorce war
overpaying mortgage
cashing out 401(k) 10% penalty (remember to max match %)
paying needless fund fees.

 dying without a willdepends on the state
unmarried, no kids = parents
married, no kids = spouse
married and kids= half and half
 will get filled in court
public after death
not joint

things that do not pass through will:
CDs, IRAs, CDs, Bank accounts, LI policy
 odd SC lawsto sell a casket have to provide full funeral services

funeral homes have to accept funeral delivery of caskets from other places

cant be cremated unless family agrees. unless prepaid
 stockonly sold in one place
has to be bough via broker

 zero coupon bondsno interest payment
usually a very safe investment.
 equipment bondsbacked up by equipment.
 fund familyvanguard, merrill lynch etc
 open end fundsmuch bigger category. infinite number of stocks and taking money. if too big might close for new inverstors.  but no close end.
 NAVNet asset value is the price per share of stock
 SEPsimplified employee pension: is a variation of IRA in the U.S applied to business owners and their employees.
 Secundary broker market 
 Secundary broker market 
 secondary dealer marketnasdaq + OTC market

buyer and seller never met. people buy and sell through a securities dealer.

bid price and ask price

pink sheets are unregulated
 interest rates and the bond priceshigh interest rates, low bond prices and opposite

you can buy at high interest rate  a low bond and sell it at a lower interest rate and a higher price.
+0
Karma