Search Here

Elevate your trading with the innovative tools, premium insights, robust education, and dedicated specialists of
Athena Equity Trading Services

Mutual Funds
Exchange-Traded Funds (ETFs)
Money Market Funds
Bonds and Fixed Income Products
International Stocks
Margin Loans

Investment Portfolios
Dedicated Financial Advice
Personal Planning

Bonds and Fixed Income Products

Get a comprehensive selection and specialized help, all at a low price.

Fixed income markets are larger with more big money than the stock markets. Retail investors looking for safe retirement investments also look at bonds. Here's how the fixed income markets work and how you can get in on the action.

What is a Bond

A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. A bond has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.

How Bonds Work

When companies or other entities need to raise money to finance new projects, maintain ongoing operations, or refinance existing debts, they may issue bonds directly to investors. The borrower (issuer) issues a bond that includes the terms of the loan, interest payments that will be made, and the time at which the loaned funds (bond principal) must be paid back (maturity date). The interest payment (the coupon) is part of the return that bondholders earn for loaning their funds to the issuer. The interest rate that determines the payment is called the coupon rate.

The initial price of most bonds is typically set at par, usually $100 or $1,000 face value per individual bond. The actual market price of a bond depends on a number of factors: the credit quality of the issuer, the length of time until expiration, and the coupon rate compared to the general interest rate environment at the time. The face value of the bond is what will be paid back to the borrower once the bond matures.

Most bonds can be sold by the initial bondholder to other investors after they have been issued. In other words, a bond investor does not have to hold a bond all the way through to its maturity date. It is also common for bonds to be repurchased by the borrower if interest rates decline, or if the borrower's credit has improved, and it can reissue new bonds at a lower cost.

Characteristics of Bonds

Most bonds share some common basic characteristics including:

  • Face value is the money amount the bond will be worth at maturity; it is also the reference amount the bond issuer uses when calculating interest payments. For example, say an investor purchases a bond at a premium $1,090 and another purchases the same bond later when it is trading at a discount for $980. When the bond matures, both investors will receive the $1,000 face value of the bond.

  • Coupon rate is the rate of interest the bond issuer will pay on the face value of the bond, expressed as a percentage. For example, a 5% coupon rate means that bondholders will receive 5% x $1000 face value = $50 every year.

  • Coupon dates are the dates on which the bond issuer will make interest payments. Payments can be made in any interval, but the standard is semiannual payments.

  • Maturity date is the date on which the bond will mature and the bond issuer will pay the bondholder the face value of the bond.

  • Issue price is the price at which the bond issuer originally sells the bonds.

Two features of a bond - credit quality and time to maturity - are the principal determinants of a bond's coupon rate. If the issuer has a poor credit rating, the risk of default is greater, and these bonds pay more interest. Bonds that have a very long maturity date also usually pay a higher interest rate because the bond holder is more exposed to interest rate and inflation risks.

Credit ratings for a company and its bonds are generated by credit rating agencies like Standard and Poor's, Moody's, and Fitch Ratings. The very highest quality bonds are called "investment grade" and include debt issued by the U.S. government and very stable companies, like many utilities. Bonds that are not considered investment grade, but are not in default, are called "high yield" or "junk" bonds. These bonds have a higher risk of default in the future and investors demand a higher coupon payment to compensate them for that risk.

Bonds and bond portfolios will rise or fall in value as interest rates change. The sensitivity to changes in the interest rate environment is called "duration". The use of the term duration in this context can be confusing to new bond investors because it does not refer to the length of time the bond has before maturity. Instead, duration describes how much a bond's price will rise or fall with a change in interest rates.

The rate of change of a bond's or bond portfolio's sensitivity to interest rates (duration) is called "convexity". These factors are difficult to calculate, and the analysis required is usually done by professionals.

Bond Issuers

There are three main categories of bonds.

  • Corporate bonds are issued by companies.

  • Municipal bonds are issued by states and municipalities. Some municipal bonds offer tax-free coupon income for investors.

  • Government bonds such as those issued by the U.S. Treasury. Bonds issued by the Treasury with a year or less to maturity are called "Bills"; bonds issued with 1 - 10 years to maturity are called "notes"; and bonds issued with more than 10 years to maturity are called "bonds". The entire category of bonds issued by a government treasury are often collectively referred to as "treasuries."

Take the next step.

Get a comprehensive selection and specialized help, all at a low price.
Open and Account with us now!

There are certain eligibility requirements for working with a dedicated Financial Consultant.

Please read the Athena Equity Intelligent Portfolios Disclosure Brochures for important information, pricing, and disclosures relating to Athena Equity Intelligent Portfolios.

There is no advisory fee or commissions charged for the Athena Equity Intelligent Portfolios Program. Investors do pay direct and indirect costs. These include ETF operating expenses which are the management and other fees the underlying ETFs charge all shareholders. The portfolios include a cash allocation to a deposit account at Athena Equity Bank. Our affiliated bank earns income on the deposits, and earns more the larger the cash allocation is. The lower the interest rate Athena Equity Bank pays on the cash, the lower the yield. Some cash alternatives outside of Athena Equity Intelligent Portfolios pay a higher yield. Deposits held at Athena Equity Bank are protected by FDIC insurance up to allowable limits per depositor, per account ownership category. Athena Equity Intelligent Portfolios invests in Athena Equity ETFs. A Athena Equity affiliate, Athena Equity Investment Management, receives management fees on those ETFs. Athena Equity Intelligent Portfolios also invests in third party ETFs. Athena Equity receives compensation from some of those ETFs for providing shareholder services, and also from market centers where ETF trade orders are routed for execution. Fees and expenses will lower performance, and investors should consider all program requirements and costs before investing. Expenses and their impact on performance, conflicts of interest, and compensation that Athena Equity and its affiliates receive are detailed in the Athena Equity Intelligent Portfolios disclosure brochures.

Athena Equity Intelligent Portfolios is made available through Athena Equity & Co., Inc. ("ATEQ") a dually-registered investment adviser and broker dealer. Portfolio management services are provided by Athena Equity Investment Advisory, Inc. ("ATEQIA"). Athena Equity and ATEQIA are affiliates and subsidiaries of The Athena EquityCorporation.

Please read the Athena Equity Intelligent Advisory disclosure brochure for important information about this program.

Athena Equity Intelligent Advisory is made available through Athena Equity& Co., Inc. (“ATEQ”), a dually registered investment advisor and broker-dealer. Portfolio management services for Athena Equity Intelligent Portfolios® are provided by Athena Equity Investment Advisory, Inc. (“ATEQIA”), a registered investment advisor. ATEQIA and Athena Equity are subsidiaries of the Athena Equity Corporation.

Athena Equity Intelligent Advisory charges no commissions or account service fees. Athena Equity affiliates do earn more revenue from the underlying assets in Athena Equity Intelligent Portfolios accounts. The revenue comes from managing Athena Equity ETFs and providing services relating to certain third party ETFs that can be selected for the portfolio, and from the cash feature on the accounts. Revenue may also be received from the market centers where ETF trade orders are routed for execution.

The Managed Account Select program is sponsored by ATEQ. Please read the Athena Equity Managed Account Services™ Disclosure Brochure for important information and disclosures. In addition, please read the participating manager's disclosure brochure, including any supplements, for important information and disclosures. Investments in managed accounts should be considered in view of a larger, more diversified investment portfolio. Services may vary depending on which money manager you choose and are subject to a money manager's acceptance of the account.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets. Investments in managed accounts should be considered in view of a larger, more diversified investment portfolio.

Please read ATEQ’s SMP Disclosure Brochure for important information and disclosures relating to Athena Equity Managed Portfolios.

Portfolio management for Athena Equity Managed Portfolios is provided by Athena Equity Investment Advisory, Inc. ("ATEQIA"), an affiliate of Athena Equity and Co., Inc. ("ATEQ").

Please read the Athena Equity Private Client and the Athena Equity Private Client Investment Advisory, Inc. Disclosure Brochures for important information and disclosures about SPC. Portfolio management for SPC is provided by Athena Equity Private Client Investment Advisory, Inc., a registered investment advisor and an affiliate of ATEQ.

Athena Equity Advisor Network member advisors are independent and are not employees or agents of ATEQ. Athena Equity prescreens advisors and checks their experience and credentials against criteria Athena Equity sets, such as years of experience managing investments, amount of assets managed, professional education, regulatory licensing, and business relationship as a client of ATEQ. Advisors pay fees to Athena Equity in connection with referrals. ATEQ does not supervise advisors and does not prepare, verify, or endorse information distributed by advisors. Investors must decide whether to hire an advisor and what authority to give him or her. Investors, not ATEQ, are responsible for monitoring and evaluating an advisor’s service, performance, and account transactions. Services may vary depending on which advisor an investor chooses.

Satisfaction Guarantee

If you are not completely satisfied for any reason, at your request Athena Equity & Co., Inc. (“ATEQ”), Athena Equity Bank ("Athena Equity Bank"), or another Athena Equity affiliate, will refund any eligible fee related to your concern within the timeframes described below. Two kinds of “Fees” are eligible for this guarantee: (1) asset‐based “Program Fees” for the Athena Equity Private Client (“SPC”), Athena Equity Managed Portfolios (“SMP”), Athena Equity Intelligent Advisory (“SIA”), and Managed Account Connection (“Connection”) investment advisory services sponsored by Athena Equity (together, the “Participating Services”); and (2) commissions and fees listed in the Athena Equity Pricing Guide for Individual Investors and the Athena Equity Bank Deposit Account Pricing Guide (together, "Account Fees"). Program Fee refund requests must be received no later than the next calendar quarter after the Fee was charged. Account Fee refund requests must be received within one year of the date that the Fee was charged.

Program Fees are calculated as a percentage of eligible assets in Participating Service accounts. For more information about Program Fees, please see the disclosure brochure for the Participating Service, made available at enrollment or any time at your request. The Connection service includes only accounts managed by Athena Equity Investment Advisory, Inc., an affiliate of ATEQ. The guarantee does not cover Program Fees for accounts managed by investment advisors who are not affiliated with Athena Equity or managed by ATEQ‐affiliated advisors outside of the SPC, SMP, SIA and Connection services.

The guarantee is only available to current clients. Refunds will only be applied to the account charged and will be credited within approximately four weeks of a valid request. No other charges or expenses, and no market losses will be refunded. Other restrictions may apply. Athena Equity reserves the right to change or terminate the guarantee at any time.