The type of bond you buy determines your risk and potential tax benefits:
: If you buy a bond at a discount (below its face value) or sell it for more than you paid before it matures, you earn a profit. 2. Choosing Your Bond Type how does buying bonds work
: Most bonds pay fixed interest twice a year. For a $1,000 bond with a 5% coupon, you receive $50 annually until it matures. The type of bond you buy determines your