Think of that teeter-totter again. When interest rates are rising, bond prices fall. When interest rates fall, bond prices shoot up. Remember that, and you re well on your way to mastering the bond market. Not by a long shot.
Bonds differ in at least a couple of key ways.
The first is the creditworthiness of the issuer. If a bond is issued by a government or a profitable and long-established big corporation, you can be nearly certain that you will receive all the payments that should come your way. Risky borrowers have to pay higher interest rates to attract bond buyers. In general, the higher a bond s yield, the riskier it is. The highest yields are usually paid by smaller firms or troubled corporations.