4. A bond is an agreement that states that:
– one person (or company, or government)
– will pay someone else
– a certain amount of money
– on a certain date.
4
9. You give the Verizon Corporation $1,000
and they give you their 1-year, 5%
corporate bond.
9
10. • You give the Verizon Corporation $1,000
and they give you their 1-year, 5%
corporate bond.
10
11. • You give the Verizon Corporation $1,000
and they give you their 1-year, 5%
corporate bond.
– 5% of $1000 is $50—you will earn $50 over
the next year.
11
13. After one year, Verizon sends you another
$25 plus your original $1000 back
13
14. • A bond is like a loan.
• If you lend money to
someone (or a company
or a government) they
pay you the money back
later—and they pay you
interest too.
14
15. “Issue” a Bond
The person (or
company or
government) who
promises to pay later
―issues‖ the bond.
Issued by the
Federal Government
15
16. “Issue” a Bond
To ―issue‖ a bond
means to ―send it out‖
Issued by the
Federal Government
16
17. “Issue” a Bond
• Typical ―issuers‖ are:
– the Federal Government
Washington, D.C.
USA 17
18. “Issue” a Bond
• Typical ―issuers‖ are:
– a State (like the state
of California)
18
19. “Issue” a Bond
• Typical ―issuers‖ are:
– a County or a City
(like the City of Elk Grove)
19
20. “Issue” a Bond
• Typical ―issuers‖ are:
– a Corporation (like Disney or Kellogg’s)
20
21. “Issue” a Bond
Typical ―issuers‖ are:
Hospitals
Airports
School Districts
Sports Stadiums
Government Agencies
21
22. Review:
typical bond issuers are
• The Federal Government
• State Governments
• Counties or Cities
• Corporations
• Nearly any large organization that needs money
22
23. Why issue a bond?
• Issuers need money.
• Maybe they want to build a highway or a prison
23
24. Why issue a bond?
• Issuers need money.
• Maybe they want to build a factory or buy a
fleet of new trucks.
24
25. Why issue a bond?
• Issuers need money.
• Or maybe they want to
build a high-rise
apartment building.
25
26. Why issue a bond?
• Issuers need money.
• Issuers sell bonds (borrow the money) and pay
the interest back with the profit they make later.
26
29. These old
bonds are Savings bonds are sold in a ―Series‖
obsolete—
they are not
sold anymore:
Series A
Series B
Series C
Series D
Series E
Series F
Series G
Series H
Series HH
Series J
Series K
29
30. Today, savings bonds are issued in
only two types:
Series I bonds
are nicknamed
―Inflation‖ bonds
Series EE bonds
are nicknamed
―Patriot‖ bonds
30
31. The Federal
Buy a Savings Bond Government
lets any local
bank sell
savings
bonds for
them.
Just walk
right up
to the
teller
window. 31
32. Buy a Savings Bond
buy on-line
www.treasurydirect.gov
32
33. At the teller window…
• You will make a withdrawal from your checking
or savings account (or give the teller cash)
• The teller will verify your name and address
• The teller will ask if you want anyone listed as a
co-owner or as a beneficiary.
• The teller will send an order to the Federal
government telling them to mail your savings
bond to your house.
• The teller will give you a copy of the bond order
and a receipt for the money you spent.
• The Federal government will mail you your
paper savings bond within 15 days. 33
34. No charge (no “load”)
• Banks cannot charge
you any fee for selling
or for cashing in
(―redeeming‖) a
savings bond.
• Savings bonds are
―no load‖
34
35. Savings Bonds are safe
• You cannot lose
money when you buy
a savings bond.
• The U.S. Government
guarantees that you
will get your money
back with interest.
• ―full faith and credit‖
of the U.S.
Government.
35
36. Savings Bonds are safe
• Registered in your name
• Replaced if lost, stolen,
or destroyed
• Only you can cash in
your savings bond
• Non-marketable (you
cannot sell a savings It’s got your name on it!
bond to anyone else, Your bond is ―registered‖
to you.
you can only cash it in)
36
37. Savings Bonds are safe
• It makes no difference
who physically holds a
savings bond.
• The owner of the bond is
the person in whose
name it is registered, like
a car. Never buy a bond from
• You can’t cross out your an individual—you will
not be the owner.
name and put someone
else’s name on it.
37
38. Earn interest every month
• Savings bonds earn
(―accrue‖) interest
every month.
• You accrue interest
every single month,
but you do not receive
any interest money
until you redeem
(―cash in‖) your bond.
38
39. Redeeming Timeline
Buy 1 year 5 years 30 years
bond
Cannot Redeem with Redeem
Redeem 3-month interest without penalty
penalty
Exception: ―Disaster Relief‖
39
40. Tax on Savings Bond interest
• Interest earned on a
Federal Savings Bond
is exempt from state
income tax.
• Earn interest every
month but don’t pay
Federal income tax
on that income until
bond is redeemed.
40
41. Exception to having to pay
Federal Income Tax
Interest earned is
excluded from
Federal income tax, if
the bond interest is
used to finance
college education.
41
42. U.S. Savings Bonds
• Savings Bonds today come in two types:
Series I
Series EE
42
44. Since 2001, paper EE bonds are
called ―Patriot Bonds‖
Since 2001
Before 2001,
just called
EE bonds
44
45. Series EE paper Savings Bonds are
purchased for half of their face value
Pay only ½ price for Series EE
• You pay only $25 for a $50 EE savings bond
• You pay only $50 for a $100 EE savings bond
• You pay only $250 for a $500 EE savings bond
45
46. Pay only price for Series EE
You pay only $50 for a paper $100 Series EE savings bond
=
46
47. Paper EE bonds (from banks) are
sold in these denominations:
$50 Electronic EE bonds
$75 from
$100 treasurydirect.gov
$200 are sold in any amount
$500 (to the penny)
from $25 to $30,000 and
$1,000
are sold at face value
$5,000 (pay $50 for a $50
$10,000 electronic EE bond)
47
48. Fixed Interest Rate
• Interest on Series EE
savings bonds is fixed Series EE bonds
for the life of the bond issued from
(30 years) Nov 1, 2010
• The interest rate for to Apr 30, 2011
new bonds is set every earn
May 1 and Nov 1.
0.60%
50
49. Series EE accrued interest
Interest accrues (is added to the bond’s value
for redemption calculations) on
the first business day
of each month.
51
50. S M T W T F S Buy near the
MARCH 28 1 2 3 4 5 6 end of the
7 8 9 10 11 12 13 month
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31 1 2 3 Interest day!
APRIL 4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24 Redeem near
25 26 27 28 29 30 1 the beginning of
the month
52
51. S M T W T F S If you buy any day
during the month,
MARCH 28 1 2 3 4 5 6 you will get the same
7 8 9 10 11 12 13 monthly interest on
interest day
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31 1 2 3 Interest day!
APRIL 4 5 6 7 8 9 10
11 12 13 14 15 16 17
If you redeem any day
18 19 20 21 22 23 24 during the month, you
25 26 27 28 29 30 1 will get the same
interest.
53
52. S M T W T F S Don’t wait until the
end of the month. It
MARCH 28 1 2 3 4 5 6 will take the Federal
7 8 9 10 11 12 13 Government a few
days to register your
14 15 16 17 18 19 20
bond.
21 22 23 24 25 26 27
28 29 30 31 1 2 3 Interest day!
APRIL 4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 1
54
53. S M T W T F S Buy near the
MARCH 28 1 2 3 4 5 6 end of the
7 8 9 10 11 12 13 month
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31 1 2 3 Interest day!
APRIL 4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24 Redeem near
25 26 27 28 29 30 1 the beginning of
the month
55
54. Series EE Compound interest
Interest compounds (is added to the bond’s
value for interest rate calculations) twice a
year—six months after the bond is issued and
every six months after that.
56
55. Series I Savings Bonds
Series I savings bonds are exactly like Series EE
savings bonds with only two exceptions…
57
56. Pay Full Face Value for Series I
You pay $100 for a $100 Series I savings bond
=
58
57. Series I Savings Bond Interest
• The interest rate on an Series I savings bond is
not fixed like the Series EE savings bond is.
• The interest rate on an Series I savings bond is
made up of two parts:
– a fixed part that cannot change for the life of the bond
(30 years)
– a variable part tied to the current inflation rate
• If inflation goes up, the interest rate of the
variable part goes up too. Rates are adjusted
every May 1 and November 1. 59
58. Series I Savings Bond Interest
• Series I bonds sold between Nov 1, 2011
and Apr 30, 2011 earn 0.74%
Fixed part: 0%
Variable part: 0.74%
• Percentages are set every May 1 and Nov 1
• For new bonds, both parts are set
• For old bonds, only the variable part is set
60
59. Everything else is the same
• No redemption in first year.
• 3-month interest penalty if redeemed
between 1 and 5 years.
• Stop earning interest after 30 years.
• Interest accrues on the first business day of
every month.
• Interest compounded every six months.
• No state income tax on interest earned
• No Federal income tax if used for college
62
Frames with faded pictures and text(Intermediate)To reproduce the picture effects on this slide, do the following:On the Home tab, in the Slides group, click Layout, and then click Blank.On the Insert tab, in the Illustrations group, click Picture. In the Insert Picture dialog box, select a picture and then click Insert. Select the picture. Under Picture Tools, on the Format tab, in the bottom right corner of the Size group, click the Size and Position dialog box launcher.In the Size and Position dialog box, on the Size tab, resize or crop the picture as needed so that under Size and rotate, the Height box is set to 3” and the Width box is set to 3”. Resize the picture under Size and rotate by entering values into the Height and Width boxes. Crop the picture under Crop from by entering values into the Left, Right, Top, and Bottom boxes. Repeat steps 2-4 to insert, resize, and crop another picture so that in the Size and Position dialog box, on the Size tab, under Size and rotate, the Height box is set to 3” and the Width box is set to 3”. Press and hold SHIFT and select both pictures. On the Home tab, in the bottom right corner of the Drawing group, click the Format Shape dialog box launcher. In the Format Picture dialog box, click Picture in the left pane, and then do the following in the right pane:Click the button next to Recolor, and then under Color Modes click Grayscale (first option from the left). In the Brightness box, enter 55%.In the Contrast box, enter -70%. Select both pictures. On the Home tab, in the Clipboard group, click the arrow under Paste, and then click Duplicate. Select the two duplicate pictures. Under Picture Tools, on the Format tab, in the Picture Styles group, click Picture Shape, and then under Basic Shapes click Frame (second row, fourth option from the left). On the slide, select one frame and drag the yellow diamond adjustment handle to increase or decrease frame width. Repeat this step on the other frame.Press and hold SHIFT and select both frames. On the Home tab, in the bottom right corner of the Drawing group, click the Format Shape dialog box launcher. In the Format Picture dialog box, click Picture in the left pane. In the right pane, click the button next to Recolor, and then under No Recolor,click No Recolor. Also in the Format Shape dialog box, click 3-D Format in the left pane, and then do the following in the right pane under Bevel:Click the button next to Top, and then under Bevel click Circle (first row, first option from the left).Next to Top, in the Width box, enter 6 pt. Next to Top, in the Height box, enter 6 pt. Also in the Format Shape dialog box, click Shadow in the left pane, and then do the following in the right pane:Click the button next to Presets, and then under Outer click Offset Bottom (first row, second option from the left).In the Blur box, enter 30 pt. In the Distance box, enter 18 pt. Press and hold SHIFT and select one of the frames and the corresponding grayscale picture. On the Home tab, in the Drawing group, click Arrange, and then do the following to position the frame directly on top of the grayscale picture:Point to Align, and then click Align Selected Objects.Point to Align, and then click Align Center.Point to Align, and then click Align Middle. Click Group. Repeat step 14 with the other frame and corresponding grayscale picture. Select each group and drag them so they are next to each other at the desired position on the slide.Press and hold SHIFT and select both groups. On the Home tab, in the Drawing group, click Arrange, point to Align, and then click Align Middle. To reproduce the text effects on this slide, do the following:On the Insert tab, in the Text group, click Text Box, and then on the slide, drag to draw the text box.Enter text in the text box, select the text, and then on the Home tab, in the Font group, select Franklin Gothic Medium Cond from the Font list and then enter 30 in the Font Size box.On the Home tab, in the Paragraph group, click Center to center the text on the slide.Under Drawing Tools, on the Format tab, in the WordArt Styles group, click the arrow next to Text Fill, and then under Theme Colors click White, Background 1, Darker 50% (sixth row, first option from the left).On the slide, drag the text box to position it inside one of the frames.Repeat steps 1-5 to create text for the other frame. To reproduce the horizontal line effects on this slide, do the following:On the Home tab, in the Drawing group, click Shapes, and then under Lines click Line (first option from the left).Press and hold SHIFT, and then on the slide, drag to draw a straight, horizontal line. Select the line. Under Drawing Tools, on the Format tab, in the Size group, in the Shape Width box, enter 10”.On the Home tab, in the bottom right corner of the Drawing group, click the Format Shape dialog box launcher. In the Format Shape dialog box, click Line Color in the left pane, and then do the following in the right pane:Select Solid line.Click the button next to Color, and then under Theme Colors click White, Background 1, Darker 35% (fifth row, first option from the left).Also in the Format Shape dialog box, click Line Style in the left pane, and then in the right pane, in the Width box, enter 0.75 pt.On the Home tab, in the Clipboard group, click the arrow under Paste, and then click Duplicate. Press and hold SHIFT and select both lines on the slide.On the Home tab, in the Drawing group, click Arrange, and then click Send to Back. Drag both lines so that they are positioned behind the pictures and frames. On the Home tab, in the Drawing group, click Arrange, point to Align,and then do the following:Click Align to Slide.Click Align Center.To reproduce the background on this slide, do the following:On the Design tab, in the Background group, click the arrow next to BackgroundStyles, and click Style 5 (second row, first option from the left). (Note: If this action is taken in a PowerPoint presentation containing more than one slide, the background style will be applied to all of the slides.)