"When You’re Buying Money,
Price Is Important."

When you’re buying money, price is important, yes!  But not as important as the quoted “yield to maturity.” 

Yield to maturity is the rate your money will be growing between getting your interest right along and cashing in the bond itself at the end for full face value.  That’s the “price” to use comparing the investment value of one bond offering to another. 

Here are two bonds of utterly different investment value.  But look, they’re  at the same dollar price: 

At 106.364, the Dorm 4s of 2014 work out to a 2.1% yield to maturity.

At 106.364. the NYC Transitional Finance Authority 5s of 2031, work out to a yield to the call of 3.869%, and, if not called, produce a 4.526% to maturity.

Some  difference. 

How come?  Because the price of a bond in dollars and cents is the byproduct of its coupon or interest rate, the number of years, months, and days the bond still has to run, and the yield to maturity at which it is being offered to you. 

Dollar price is only the amount of the investment it takes to set that yield to maturity in stone.    

So how do you know you’re paying the right price?

Same way I do: by comparing bonds of similar interest rate and maturity by their yields to maturity -- the return you’ll wind up with if you stay the course and hold to maturity. 

That's the beauty of the fixed-income investment. Your yield is so knowable up front. Good old yield to maturity.