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Q. I bought \$25,000 face value bonds at 6.5 percent. I paid \$25,321, but the next month the statement read \$24,250 and the yield was 6.7 percent. Well, 6.7 percent is better than 6.5 percent, but why has my initial investment decreased by \$1,071? The agent said they have to reflect the fluctuation in market value. I figure the \$321 went to the broker for fees, but what happened to the rest of the money?

A. Don't go through life confused: If you intend to continue investing, ask your broker, your accountant or a knowledgeable friend to go over the paperwork with you and help you learn how to interpret trade confirmation reports and monthly account statements. Here is some information to get you started:

According to the documents you sent, part of the price you paid for the bonds was an interest payment to the seller. Because you now own the bond, the next interest payment will be sent to you. But because you bought your bond between interest payments, you are not entitled to a full six months' interest. This common situation is resolved by having the bond buyer pay the seller for the seller's share of the next interest payment.

The bonds will pay 6.5 percent interest based on the \$25,000 face value. When the market interest rate for bonds of this type is 6.5 percent, investors will pay face value: \$100 for a bond that pays \$6.50 in annual interest. But if market interest rates rise, investors expect a higher yield for their money. They might pay only \$93 or \$94 for a bond with a \$6.50 annual payment. That's why the value of your bond fluctuates on your statement and why you may get more or less than face value if you sell before maturity.

The change in yield on your statement does not mean the interest payment on your bond changed. The yield went up because the brokerage firm computer recalculated it, dividing the same dollar amount of interest by the lower market value.

Before you buy more bonds, invest some time in learning how they work. The issuer's credit rating and provisions for early redemption (if any) are two key points to understand. Also, be aware that some types of bonds include interest and principal in the payments sent to bondholders. People who don't pay attention to this sometimes spend their principal inadvertently rather than reinvesting it.

Q. Because of rising medical expenses, I am able to itemize deductions on my income tax return. I have one question about that. My Florida intangibles tax form lists my various company stocks and mutual funds. Can their total value be deducted on my Form 1040, Schedule A, under "personal property tax"? It would save me a sizable amount of money.

A. You are on the right track. The intangibles tax is classified as a personal property tax, and the amount of tax you pay is deductible on Schedule A of your federal Form 1040 if you itemize deductions. But if you are asking whether you can deduct the value of your investments on Schedule A, the answer is no. Only the tax payment is deductible.

Correction

Last week's question from a reader who wanted to claim his girlfriend as a dependent on his tax return generated a flurry of responses from tax preparers. It turns out I was wrong. Even if the girlfriend meets all the usual requirements to claim someone as a dependent, the IRS will not allow it. Why? Because the IRS considers unmarried couples living together to be in violation of the old Florida law against "lewd and lascivious" cohabitation. I couldn't get any IRS auditors to discuss this with me, but preparers say the IRS takes a hard-line approach. My new advice: Don't claim unrelated dependents unless you are prepared to do battle with the IRS.

Online money map

If you're looking for news and information about financial planning, investing and consumer issues, check out the "Money and Work" section on AARP's Web site (www.aarp.org/moneyguide). The site includes guides on topics from wills and powers of attorney to home sales.

Do you have a favorite money-related Web site you'd like to share with Times readers? If so, please send me an e-mail.

_ Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.