Bonds

Explain why a company might issue bonds instead of stock

Describe corporate bonds and what they represent

Identify the principal ways to issue bonds

Lesson Objectives

Bond Callable Compound Interest Coupon Bonds Coupon Rate Current Yield Dealer Market Debenture bonds Discount

Dividend Face Value Fixed income security Inverse relationship Junk bonds Market price Maturity Date Mortgage bonds Note (Bank) Par Value

Key Vocabulary

Premium Present Value Private placement Public offering Senior securities Stated Yield Yield Yield to Maturity

Zero-coupon Bonds

Key Vocabulary

Imagine you are small business owners interested in raising capital to support the growth of their company In addition to the stocks, there exists

another type of security that companies use to finance their operations: corporate bonds

Introducing Bonds as Securities

Download- Frayer Organizational Model: Bonds Use this to organize your information

Download- Reading: An Introduction to Bonds As you read jot down words and phrases

that fit into the Frayer Model Essential characteristics Nonessential characteristics Examples Non-examples

Building Knowledge about

Bonds

Essential characteristics are traits that bonds would always have

Nonessential characteristics are those traits that bonds might sometimes have

Building Knowledge about

Bonds

Download- Worksheet: Corporate Bonds Complete and submit to the website

Investigating Bonds

The most important thing that I learned about bonds was…

One of the main benefits of financing a company through bonds is…

Reflection

What do you think determines a bond’s value? Many companies use debt to finance their

businesses A bond is one form of a company’s long-

term debt

Price of a Bond

Download- Reading: Determining the Price of a Bond After each section write down the key

points Complete the two questions at the end of

the Present Value section before moving on

Setting Bond Prices

Download- Assignment: Stocks and Bonds Recommendations You will be making recommendations to

two friends—one who is trying to help her parents save for retirement and another who is interested in launching his own business

Download- Reading: Comparing Stocks and Bonds

Giving Advice on Stocks and Bonds

Understanding the differences between stocks and bonds and being aware of how and why they are issued is an important financial concept to grasp.

Not only is this knowledge important on a personal level, as it can affect the investment choices that you make for your future, but it also provides individuals with an understanding of the critical role that stocks and bonds play in the health and strength of the economy in general

Giving Advice on Stocks and Bonds

Have students refer to the following website: http://beginnersinvest.about.com/cs/warrenbuffett/a/aawarrenquotes.htm and choose one of the quotes to analyze. Have students decide if they agree or disagree with the statement with an explanation of their reasoning.

Enrichment

Social Studies: Explain to the class that US Savings Bonds are the single most widely held security in the world and that over 55 million Americans own them. Over the last 60 years, posters have helped to promote the sale of savings bonds. Instruct students to refer to the website http://digital.library.unt.edu/permalink/meta-dc-567:1, and examine the poster on the site. Have students make a list of various elements that they notice. For example, how would they describe the family? What can they say about the slogan? Next, have students create their own US Savings Bonds poster that includes a slogan and a picture that accurately depicts today’s culture.

Cross-Curricular Integration