Manage bond portfolios with calculated care.(BUSINESS & MONEY)(The Rational Investor)

Byline: Dr. Robert Stepleman

Serious bond investors will achieve more satisfactory results if they carefully manage their bond portfolios.

Several readily available tools allow bond investors to balance return against both default risk and bond price volatility.

There are at least four critical criteria that serious bond investors should know when they consider buying a bond:

* Default Risk -- This is the risk that bond buyers take that they will not receive promised interest payments and return of their principal. This is quantified by bond rating agencies like Moody's and Standard and Poor's. Bonds are rated from AAA (best) to D (worst).

* Maturity Date -- This is the date the borrower is obligated to return the bond buyer's principal.

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