I agree with the professor. Bond is designed to investors who really understand it. If you are still reading Bond 101, stay away from it at this low interest environment.
There are too many variables involved in bonds and you need understand at least the following before start bond investing:
1) Price/Yield relationship and the ability to calculate YTD from cash flows.
2) Many risks assocated to bond. General interest risk, sector risk, credit risk, default risk, call risk, risk of losing tax exempt status due to legistation.
3) Understand duration of bond.
4) Understand bond convexity.
5) Understand how different types of bond work – Government bond, muni bond, zero-coupon bond, mortgage bond, corporate bond, junk bond, inflation protected bonds.
6) Understand tax consequence of bond. For muni bond there may be portion of income subject to AMT.
I assume you only have a vague idea of price up when yield down, then it is really not good to you.
