How to Buy a Bond

On August 1st, Fitch downgraded the rating of the US. This caused a selling frenzy causing interest rates on treasuries to go up. Those bonds that were issued in July at 3.625 percent started to sell at $920 a bond. If you were to divide $36.25, the interest on one bond by $920, which was the current price of that bond, a little bit ago, you'll find that is about a 4 percent return on your money.