How to Determine the Selling Price of Bonds

Video Transcript

"My name is Bill Rae. I'm with Alumni Financial Services. I've been in the business in the finance world for well over 20 years and your question is how to determine the selling price of a bond. That's an excellent question. First of all let me tell you we're not offering stock advice or soliciting. However, I also believe that we should understand what is a bond. Well in the financial world a bond is a debt security in which an authorized issuer owes an obligation to an owner. Fancy talk for someone who borrowed money and agrees to pay someone else in a certain time and a certain percentage. Now there's all types of bonds, corporate bonds, treasury bonds so that's another topic altogether but how do you determine the price of a bond on any given day, numerous ways. First of all the obvious one is to call the holder of the bond. The other thing one can do is every good newspaper has a financial section in it that lists all bonds, stocks and everything that is available that's another place to look. They're also available on line. There is plenty of people such as Booties that will show you not only the rating and the quality of the bond holder but generally will give you an idea of what those bonds are worth. You're going to see some things such as an 85 or a 90 meaning that that's the value against the face of the bond. It will get you started. As always we advise you to understand the obligations you are in before you sign. Know what you have to invest, know when and how you are going to get your money back and understand the fees or the costs associated with that and always seek sound licensed competent advice. My name is Bill Rae. I'm with Alumni Financial Services and we're here to help you build wealth."