The Secondary Markets of the Long-Term Bond

A long-term bond is a common investment tool in portfolios. Bonds are debt instruments that corporations and the government issue to raise money. Investing in a long-term bond directly from a company has its advantages. However, the secondary bond market is also an intriguing investment alternative. Here are the basics of how the secondary long-term bond market works. 

Secondary Bond Market

After someone initially purchases a bond from a corporation or the government, it can be resold on the secondary market. You can buy bonds on the secondary market from a bank or financial institution. You can also deal with a bond broker to have access to many different bonds. 

Valuing Bonds

One of the most important things to understand about bonds is how to value them. You have to determine how much a bond is actually worth in today's dollars before you buy one. For example, if the interest rate of the bond is higher than what you can get in the open market today, then someone would pay more than the normal value for the bond and vice versa. Make sure that you get some help from a broker or someone who is experienced in the bond market before making any purchases.

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