Bonds have (generally) $1,000 increments. Bonds are priced as a percentage of par value. Many bonds have minimums imposed on them.

Bonds pay interests at given intervals. Bonds with fixed coupons usually divide the coupon according to the payment schedule. Bonds with floating rate coupons have set calculation schedules. The rate is calculated just before the next payment. Zero-coupon bonds are issued at a deep discount, but they don’t pay interests.

Bond interest is taxed, but in contrast to dividend income that receives favorable taxation rates, they are taxed as ordinary. Many government bonds are, however, exempt from taxation.

Individual investors can participate through bond funds, closed-end funds, and unit-investment trusts offered by investment companies.

Bond Indices

A number of bond indices exist. The common American benchmarks include Barclays Capital Aggregate Bond Index, Citigroup BIG, and Merrill Lynch Domestic Master.