Understand how bonds are issued

Bonds are issued with a certificate in electronic form. The par value is the dollar amount stated on the face of the bond certificate.

The annual interest rate paid to the investor is also included on the bond certificate, along with the maturity daate
•    Once the bond is sold to the initial investor in the primary market, the bond can be traded between an unlimited number of investors. Bonds are bought and sold between investors in the secondary market.
•    Assume that Bob owns an IBM corporate bond. Bob sells the bond to Sue. The sale between these two investors is a secondary market transaction.
•    Bonds trade based on a market price in the secondary market. The price is driven by demand, the interest rate on the bond and the credit quality. If a bond is trading at a discount, the market price is less than $1,000 per bond. Premium bonds are bonds that are priced above $1,000 per bond. An investor who sells a bond may incur a gain or a loss