University of Minnesota - UMN Executive Leadership Insights
The Bond Book
Book

The Bond Book

Everything Investors Need to Know about Bonds, Treasuries, Municipals, GNMAs, Corporates, Zeros, Bond Funds, Money Market Funds and More

Annette Thau
McGraw-Hill, 2001
First Edition: 1991
Buy book or audiobook

Read or listen offline

Amazon Kindle
  • 0.5×
  • 0.75×
  • 1×
  • 1.25×
  • 1.5×
  • 1.75×
1×

Editorial Rating

8

Qualities

  • Applicable

Recommendation

This is an accessible introduction to bonds by a financial professional whose first book - as unlikely as it may seem – was a study of Max Jacob, the French poet. The literary background of the author, Annette Thau, may account for her book's clear, easy-to-read style. Most authors who write about bonds tend to get lost in the complex mathematics and specialized jargon of the bond markets. Not Annette Thau. Whether you are an individual investor trying to balance your portfolio with bonds, or a student of finance looking for a more lucid explanation of the subject than you can find in your textbooks, getAbstract highly recommends this book to you.

Summary

Know Whereof You Speak: Bonds Defined

A bond is a debt. A government, company or other entity borrows money and promises to repay it. The promise is in writing, and that written promise is a bond. The promise will usually commit the borrower to repay the principal and also to pay interest at some defined rate. It is that simple. When companies borrow capital in the bond markets, they are said to “issue” bonds.

Although bonds are simple, the process of issuing a bond is complex. It involves investment banks, lawyers and other entities. Suppose the following scenario: A state wants to borrow money in the bond markets. The state invites investment banks to submit bids. Usually the investment banks form groups called syndicates and offer to buy the state's bonds at some stipulated price. The investment bank that offers the state the best deal usually gets to buy the bonds and resell them to the public – or, most often, to big insurance companies, banks, mutual funds and similar investors. After the syndicate has sold the bonds, it dissolves and the banks that were involved have nothing else to do with the bonds. The borrower pays the bond investors their interest and a...

About the Author

Annette Thau, Ph.D., is a former municipal bond analyst for Chase Manhattan Bank. Until recently, Dr. Thau was a visiting scholar at the Columbia University Graduate School of Business.

Comment on this summary