Bonds / Bond ETFS

Question 1

What is the TLT

Answer 1

The TLT ETF Tracks the Barclays U.S. 20+ Year Treasury Bond Index.

Question 2

What is a bond ETF?

Answer 2

Bond ETFs are exchange-traded funds that invest in various fixed-income securities such as corporate bonds or Treasuries.

Question 3

Name some popular types of Bond ETFs.

Answer 3

Bond ETFs are available for a variety of bond categories, including Treasuries, corporates, convertibles, and floating-rate bonds.

Question 4

Are individual bonds usually traded on an exchange?

Answer 4

No. Individual bonds are sold over the counter by bond brokers.

Question 5

What is a major risk factor to bonds / bond ETFs?

Answer 5

Interest Rate Changes.

Question 7

True or False: If you believe interest rates will fall, then it makes sense to invest in a long-term bond fund like the TLT? Why?

Answer 7

True.
Generally speaking, if you expect that interest rates will rise in the future, it is best to avoid long-term bonds such as those that are tracked by the TLT. If that happens, you’re locking in a lower interest rate.