**Interest Rate **– The interest rate determines the amount of interest paid to investors in exchange for the use of their loaned money. This rate is a percentage of the "principal" (amount borrowed) that accrues over a specified period of time. For fixed-rate bonds, interest is usually compounded and paid every six months.
**Price **– The interest rate determines the amount of interest paid to investors in exchange for the use of their loaned money. This rate is a percentage of the "principal" (amount borrowed) that accrues over a specified period of time. For fixed-rate bonds, interest is usually compounded and paid every six months.
Yield – The yield is the return an investor earns on the bond. The yield is based on the market price and coupon interest rate and can be based on a number of factors such as maturity date and the time between interest payments. Investors should consult their broker to learn more about yield.
Maturity – This is the date when the principal owed to the investor becomes due. The State of Oregon generally sells bonds with maturities between one and 30 years. Generally, the longer the maturity, the higher the yield.
**Redemption Provisions **– Some bonds may contain provisions that allow the State of Oregon to redeem, or "call," all or a portion of the bonds, at set prices, prior to their maturity dates. Bonds are frequently called when current market interest rates are substantially lower than when the originally sold. Bonds with redemption provisions usually have higher yields to compensate for the risk that the bonds might be called early. When a bond is called, the investor is paid the principal amount and any interest earned since the last interest payment. However, the investor does not receive the interest that would have been earned if the bond had been allowed to reach its maturity date. Investors are notified of impending calls.
**Creditworthiness **– Most municipal bonds are rated by one or more of the three major rating agencies: Fitch Ratings, Moody's Investors Service, and Standard & Poor's. A credit rating is an independent assessment of the creditworthiness of the bonds by one of the aforementioned rating agencies. The creditworthiness of a bond is a measure of the probability of the timely repayment of principal and interest of a bond. A higher credit rating indicates the rating agency's view that there is a greater probability the investment will be repaid in full and on time.