Financial Knowledge

Bonds, Interest Rates & Exchange Rates

This section covers questions investors often ask, from the basic structure of bonds to interest rates, credit ratings and duration, the base rate and the yield curve, exchange rates and currency risk, and the bond side of mezzanine bonds. It is provided for general information and is not a recommendation to invest in any particular product.

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52 questions · Last updated

  1. 01What is a bond? Please explain simply.
  2. 02How do bonds differ from stocks?
  3. 03Is the principal of a bond guaranteed like a deposit?
  4. 04What kind of bond is a government bond?
  5. 05What is a corporate bond and how is it issued?
  6. 06What types of bonds are there by issuer?
  7. 07How do coupon bonds and discount bonds differ?
  8. 08What do a bond's face value and coupon rate mean?
  9. 09How do you earn returns from investing in bonds?
  10. 10Why do bond prices fall when interest rates rise?
  11. 11Do longer-maturity bonds have bigger price swings?
  12. 12If I hold to maturity, does it matter if rates rise?
  13. 13What is duration?
  14. 14How do you estimate bond price changes using duration?
  15. 15Which bonds have longer durations?
  16. 16What is bond convexity?
  17. 17What is yield to maturity (YTM)?
  18. 18What does a bond's credit rating mean?
  19. 19How are credit ratings like AAA and BBB classified?
  20. 20Does a high credit rating mean a low product risk grade?
  21. 21What is a credit spread and why does it matter?
  22. 22What are high-yield bonds?
  23. 23How do subordinated bonds and contingent capital securities differ from ordinary bonds?
  24. 24How does commercial paper (CP) differ from corporate bonds?
  25. 25How do over-the-counter bonds and exchange-traded bonds differ?
  26. 26What is the private valuation yield, and why should I check it when buying bonds?
  27. 27Where can I compare whether an OTC bond's price is reasonable?
  28. 28If I want to sell a bond before maturity, can I sell it at any time?
  29. 29What is the base rate?
  30. 30Who sets Korea's base rate, and how often?
  31. 31What effects does a base rate hike have on the economy and markets?
  32. 32The base rate was cut, so why did my bond's price fall?
  33. 33What is a yield curve?
  34. 34What does it mean when short- and long-term rates are inverted?
  35. 35If I think rates will fall, should I buy long-term bonds?
  36. 36What are ladder and barbell bond strategies?
  37. 37Can I lose money on overseas bonds because of exchange rates?
  38. 38Does a rising exchange rate mean the won is losing value?
  39. 39What moves exchange rates?
  40. 40How can I tell currency-hedged products from unhedged products?
  41. 41Does currency hedging eliminate exchange rate risk completely?
  42. 42Are products invested in foreign currency given higher risk grades?
  43. 43What are the bond characteristics of mezzanine bonds?
  44. 44What is the 'guaranteed yield to maturity' of a convertible bond (CB)?
  45. 45How do bonds with warrants (BWs) and convertible bonds (CBs) differ as bonds?
  46. 46What is an exchangeable bond (EB)?
  47. 47What is the early redemption right (put option) on mezzanine securities?
  48. 48When can convertible bonds issued by a listed company be converted into shares?
  49. 49What does an adjustment of the conversion price (refixing) mean for bond investors?
  50. 50Is a CoCo bond (contingent capital security) the same as a convertible bond?
  51. 51Is it disadvantageous to redeem a maturity-matching bond fund early?
  52. 52Is a derivative-linked bond (ELB) a safe, principal-guaranteed bond?

General financial information, not investment advice. Rules and tax rates change; please check the latest guidance from the source institution.