Over the summer, I read a fair number of college texts on different subjects. One of the texts was a brief look at economics. You might wonder when a college text on economics would come in handy to anyone other than a broker--I wondered the same. Well, it turns out that I was able to apply my newly gained knowledge of good investing in this math class before I could apply it in economics.
Anyway, here's my article discussing which is a better choice: Bonds or loans?
(But don't go buying bonds or loans based on the coupons I used as examples in the article.)
Bonds or Loans? - Google Docs
"By suspending judgment, by confining oneself to phenomena or objects as they appear, and by asserting nothing definite as to how they really are, one can escape the perplexities of life and attain an imperturbable peace of mind."
-Pyrrho
Chris, This is an outstanding article and representation of the scenario presented in class. I hope that everyone reads it because it's very accurate.
ReplyDeleteIn the case of bonds, they are guaranteed to be bought back by the government at the end of the loan term. What you say about the bond being less valuable in the open market (selling to the public) once the government offers a better bond is true, but at the end of the term of the bond the government is forced to pay you back the face value (amount you paid) of the bond.