TRADING BONDS

Newly issued bonds are sold via the primary market, where bonds are directly available to investors, without intermediaries, or commission. In the primary market, banks and brokers may buy large amounts of bonds at par, or face value, and then sell them to investors in the secondary market where bonds are bought and sold after they have been issued. Bonds will often change hands many times on the secondary market before maturity, and can be purchased at a discount, premium, or at par. Most bond trading occurs in the secondary market, yet when bonds change hands in the secondary market the issuer does not receive income on trades as it did in the primary market.