Archive for the 'Glossary' Category

What is a bond?

A bond is defined as an interest-bearing certificate issued by a government or business, promising to pay the holder a specified sum on a specified date.
Common wisdom says bonds are a safe haven from stock market turmoil. Does that mean you should buy bonds if that turmoil comes from recession or inflation?
Complicating the situation is […]

What is a compounding interest rate?

The frequency that a financial institution compounds interest on your deposit. Banks and financial institutions routinely use compounding to pay you a higher interest rate.
For example, a financial institution may be offering a CD that pays interest at 10%. If the institution does not compound interest, you will receive 10 percent of your investment as […]