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6. Executing Trades > Buy Bonds Online

Buy Bonds Online

Online trading for bonds isn’t in the same league as online stock trading, but a few brokerage firms offer true electronic bond trading.

When a corporation or government borrows money, it issues bonds [Hack #80] , which are nothing more than promissory notes. The organization that issues bonds pays interest to the people who loan them money—the investors who purchase the bonds. After a period of time, the organization pays the money it borrowed back to the bondholders. Many investors purchase bonds to receive a steady stream of income. However, bonds can also provide capital gains when interest rates fall. Sad to say, online bond trading hasn’t kept pace with its electronic stock trading counterpart. Many online brokers act as if they offer online bond trading, but the service might be no more than a glorified messenger service, in which the online trade forwards the order information to a human broker who fills the order the old-fashioned way. Ot....


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