Insurance bonds
Credit quality may be improved at the expense of insurance bonds. Specialized insurance companies serving the market with fixed-income securities, guarantee investors the timely payment of principal and interest on bonds insured by them. In the U.S., the largest firms of insurance bonds are MBIA, AMBAC, FGIC and FSA. Most of these companies have at least one credit rating of the three "A" rating agency assigned a national scale. The insured bonds, in turn, get the same rating based on the amount of capital the insurer and its resources for the payment of claims. Historically, the activity was concentrated in the area of municipal bonds, but bond insurers also provide guarantees for the obligations, mortgage-and asset-and gradually moving to the markets, selling other types of securities. Tax status. Some types of bonds offer investors tax advantages. Thus, interest paid on U.S. Treasury bonds is not taxed state and local authorities, interest on most municipal obligations are not subject to tax federal taxes, and in many cases - and also the local income tax. Investors generally prefer to receive taxable income, or vice versa, the income from which taxes are not levied, depending on the level of the tax scale to which his income, as well as the difference between income from taxable and tax-bonds (not just at the moment but also for the entire period to maturity). The decision about investing in taxable or tax-free bonds also depends on whether the investor holds the securities in the account with a delayed payment of taxes or tax incentives (such as for example, retirement accounts, accounts 40l (k) or IRA). Price. The price the bonds is based on a large number of variables, including interest rates, supply and demand, credit quality, maturity and tax status. Bonds new releases are usually sold at face value or close to this level. The prices of bonds traded on the secondary market, varies in response to changes in interest rates. If the price of the bond exceeds the nominal value, then say that a bond is sold at a premium, but if the price is lower than the nominal value, say the bond is sold at a discount. Treasury bonds, whose primary placement is carried out by an auction and are sold at a discount to face value, as they are repaid at their nominal value.
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