[south0085]

Okay, I’m on FAR chapter 5 in Becker Review Course. I don’t get bonds. I just simply don’t understand them. Almost everything else, I can see the big picture of….but not bonds. When I read the material or read a questions it’s just like reading a bunch of Chinese characters. It makes no sense whatsoever. I need some opinions on what to do. I am thinking of purchasing the Bisk Hot Spots for Bonds taught by Robert Monette. Does anyone have an opinion on this product? Is there something else you recommend? Thank you.

[Trevor]

Do you have an old accounting textbook from your college/university? I would try to explain them the best I can if you would like… I think they are an important part of FAR.

BEC: 73,81(7/6/2010); AUD: 75(5/24/2010); FAR: 76(8/31/2010); REG: 77 (10/18/2010) - DONE!!!!

[south0085]

That would be awesome. You mean over the phone or email or what? I can email you my phone number or give you my email address.

[Trevor]

The basic concept of a bond is that it is debt to the issuer and and asset for the purchaser. There are several key aspects to a bond 1) the Face Value (amount it was issued for) 2) the interest rate, and 3) the maturity date of the bond.

The interest rate might be the most important factor on a Bond because it will determine whether the bond is sold at a premium or a discount. This can be very confusing, but simply if the interest rate on the bond is MORE than the market interest rate (i.e. amount you could get in savings) then the bond will sell at a PREMIUM. What this means is that a bond with a Face Value of $100K might sell for $110K… The reason is that the individual who purchases this will get more in interest payments then s/he would in a savings account.

The oppisite is true for a bond sold at a DISCOUNT. The interest rate on the bond is LESS than the interest rate then could be earned in the market. If you think about it, it makes sense… you will pay less for the bond because you will earn less in interest. Why would someone go buy a bond for its face value and earn 6% when they could put that same money in a savings account and earn 8%? doesnt make sense to buy the bond, so by DISCOUNTING it the seller has a chance to sell it. It would be vice versa for a bond sold at PREMIUM, why wouldnt we want to buy it. So the sellers can charge more for it…

Hope that helps a little. I can explain the amortization also…

BEC: 73,81(7/6/2010); AUD: 75(5/24/2010); FAR: 76(8/31/2010); REG: 77 (10/18/2010) - DONE!!!!

[Trevor]

Sure my email is tmarsha21@gmail.com. I couldnt explain now through phone, but could through email (at work)

BEC: 73,81(7/6/2010); AUD: 75(5/24/2010); FAR: 76(8/31/2010); REG: 77 (10/18/2010) - DONE!!!!

[south0085]

I emailed you. Thanks for the help!

[thorsbew]

Can you forward that e-mail to me? Taking my exam Monday and any additional help is great! thorsbew@gmail.com

Aud - 65 + 79, BEC - 82, REG - 89, FAR - 86

[Author]

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