|Buying and Selling Bonds|
Investing in bonds can require a relatively large outlay of
principal. Although par value is usually $1,000, many bonds are not
available individually and are sold only in lots of five or more.
Agency bonds in particular may have a minimum investment of $10,000.
Because of this high initial investment, it’s more typical
for institutions, such as mutual funds and pension funds, to own
corporate and agency bonds than it is for individual investors. Some
of the same issues exist with municipal bonds, but certain issuers
may market to individuals in part to build community support for
Treasury securities, however, are the exception. New issues
are sold by the Treasury directly to the public on the
TreasuryDirect Web site at www.treasurydirect.gov, and you may buy
bills, notes, and bonds individually with a minimum investment of
To buy or sell all other bonds, you usually need to work with
a broker, who matches you with sellers and buyers through a bond
dealer. Sometimes the
broker’s own firm has bonds in their own inventory to sell, and
these may be priced better than bonds the broker must buy from
another firm. Bond prices are not as transparent at stock prices, in
part because the commissions you pay when you buy or sell them are
not reported separately, as stock commissions are.
While some bonds trade on the major exchanges, the majority of corporate bonds trade over-the-counter and, until recently, it was difficult for individuals to find current prices. Today, extensive real-time trade information and end-of-day index information on corporate bonds is displayed without charge in the Market Data section of FINRA’s Web site at www.finra.org/marketdata.
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