Bonds are similar to stocks because you make money in two ways. The first way is capital appreciation. That is, the bond increases in value if interest rates decline. If interest rates decline, you can sell the bond at a premium. In other words, you can sell it for more money than you paid for it. The second way to make money is the periodic interest payments you receive during the bond term.

Bond terms can be as short as 13 weeks or as long as 30 years. They can be virtually risk-free and guaranteed by the U.S. government, or they can be speculative, highfliers that can crash and go into default.

Bond indexes are designed to represent either the average yield-to-maturity or the average price on a portfolio of bonds that have certain similar characteristics. Historical data can also provide bond performance insights.

A Few Examples of Internet Sources for Historical Data

The Internet provides several sources for these averages and historical data, for example:

* Bondsonline http://www.bondsonline.comovides charts and historical data that compare various bond market sectors, for example, a comparison of the 30-year treasury bonds, ten-year treasury notes, and the Dow Jones Industrial Average, or a comparison of tax-free municipal yields as a percentage of U.S. treasury yields.

* Federal Reserve Bank of St. Louis http://stls.frb.org all the monthly interest rates for each type of treasury security. Files for specific treasuries (for example, the one-year Treasury bill rate auction average) are downloadable and zipped.

* Moody's Investor Services http://www.moodys.com  provides long-term corporate bond yield averages based on bonds with maturities of 20 years and longer. Corporate bond averages are sorted into average corporate, average industrial, and average public utility groups, and by bond ratings.

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Last modified: June 13, 2008