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What are some fixed-rate bonds?

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Some fixed-rate bonds include U.S. Treasury bills and corporate bond funds that offer fixed interest rates, as Advisory HQ describes. The U.S. Treasury Department issues series I and series EE fixed-rate bonds to investors looking for protection from an inflationary economy. However, since the U.S. government does not default on bond payments, the rate of return is lower than fixed-rate bonds issued by the private sector.

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Full Answer

Other fixed-rate bonds include mortgage-backed securities, corporate debt and municipal bonds, explains Advisory HQ. Many investors consider the bond market a safer investment than the stock market, but the bond market is not free from risk. Bond investors face risks such as a bond issuers credit worthiness, the possibility of default on payments and corporations with liquidity risks issuing fixed-rate bonds.

A fixed-rate bond provides investors with preset interest rates paid over a predetermined schedule of periodic payments until the bond reaches a maturity date, as Investopedia details. If the issuer of the bond does not default on the payments, bondholders know the exact amount of interest earned on the investments and for how long. Fixed-rate bonds appeal to investors who want to earn guaranteed interest rates for a fixed amount of time. Rising interest rates in a struggling economy is a risk that affects the value of fixed-rate bonds.

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