In the last several sessions, we discussed investment profiles. In this session we'll continue to discuss some of the different types of bond funds and cash investments that Value Line's asset allocation formula recommends.
Bonds are long-term debt obligations.
Those who invest in a bond generally receive monthly or quarterly interest payments, plus the return of their principle when the bond reaches maturity. Corporate bonds are rated on several different quality scales. Value Line uses the Standard and Poor's scale which runs from AAA, the highest-grade bond, to C and below. For more information on these scores you should consult an introductory book about bonds. For now, though, it is enough to understand that the higher the letter, the higher the bond's quality, and, the more of any given letter the better the score.