The bond market system is decentralized in many countries. But, exchanges do list certain types of corporate bonds. The brokers, dealers and the financial institutions carry out the dealing over the counter. The bond market can be predominantly classified into 5 broad categories -- government and agency, municipal, corporate, funding and, asset and mortgage backed bonds. The most popular type of bond market is of the government due to the size, risk factor, interest rates as well liquidity. The interest rates and bond valuation are inversely proportional. This explains the volatility of the yield curves in this type of fixed income market. The participants in a bond market can be private individuals, traders, investors of large institutions and governments. Only 10 percent of the bond market finances are from individuals. Most of the unpaid bonds are held by banks, pension funds and mutual funds.
Individuals participate in the market through closed-end funds, bond funds and unit investment trusts. Exchange traded funds, also known as ETFs, are a popular option for direct investing or trading. Through these options, investors can easily overcome huge initial investments and also cope up with increments in the trading sizes. New York Stock Exchange (NYSE) is one of the largest bond market which deals primarily with corporate bonds.
More Articles :
|
