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Author: wcfenton Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35397  
Subject: Re: Total Bond Market ETF Date: 4/22/2003 12:58 PM
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Greetings brucedoe...

You will be buying at a high if you do this, although the income should increase as the price of bonds falls. Maybe this is important to you?

I haven't studied the bond market I'm afraid. I just know that it is financially prudent to allocate your assets as best you can. I have never thoroughly understood the correlation between bonds and the interest rate.

Basically, what I understand (I think) is that when interest rates go up...bond values (meaning both purchase price [NAV] and yield for new bonds) go down. Is that basic assumption correct? I have also heard that even if a person invests in a widely diverse total bond index fund that they would loose some, but not a significant portion, of their investment if interest rates go up.

Also, how is periodic income produced...coupons? How do they work?

I appologize, I should have done my homework. Any lessons given, however, will be gratefully received.


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