Can someone explain in detail what are unit trusts, bonds, blue chips, Options trading, CFD and the difference

Answer 1

You ask a lot for 2, maybe 10, points.

Bonds, like corporate debt, are commonly $1,000 units of a debt issue. You have a pre-set interest rate. When the general interest rates fall, these bonds will rise in value so that the effective yield falls, and vice versa for general interest rates rising. At the maturity, you still get your $1,000, so if you bought at a premium, a percentage over 100 percent, then you should have meanwhile amortized the interest earned to compensate for the loss you will take in principle, or vice versa. Will the company still be operating then, still able to pay off that debt when the time comes? That is the issue of ratings agencies like Moody's and a couple others. Think of it like a golf handicap. Junk bonds are rated poorly because there is increasingly higher risk that they will survive (like Revlon, for instance, I own stock but not bonds, and probably shouldn't own either, but if its good product lines start making money, or someone buys them out, then I make more money faster with the stock). But a solid company, the IBM and Coke types, these are called blue chips, after the supposedly more expensive poker chips (but then I don't play cards for money so I have to take other's word on that). The amount of risk you face with IBM or a cash cow like Microsoft or Exxon, is far and away from the risky stuff like Revlon or Gateway before the buy-out offer.