Use this tag for questions that relate to debt instruments known as bonds. Generally, money is lent to governments or corporations that is paid back with interest.

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How far into a Defined Maturity Bond Fund does it stop making sense?

Some here have suggested instead of Individual Bonds I should look for Bond Funds. I've looked into Guggenheim BulletShares and Fidelity Defined Maturity Funds. What I'm not clear on is the timeline ...
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26 views

How does Value get rounded in figuring out Bonds Value?

I was reading up on Bonds here on About.com Why Do Bond Prices and Yields Move in Opposite Directions? In the second example it offers: In this example, the opposite scenario occurs. The same ...
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40 views

What to know before purchasing Individual Bonds?

What are the different factors and terms one should be acquainted with before investing in individual bonds? I'm currently looking at: It's all rather foreign to me though. When I look at this page ...
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1answer
47 views

Treasury bills, how do they work?

I am looking at Bills tab on the site: http://www.treasurydirect.gov/instit/annceresult/annceresult.htm There is a 4-week security term with what appears to be a 4-week maturity date, with ...
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1answer
50 views

Where to buy good corporate/goverment/treasury bonds?

I am non american citizen. I read a portion of Benjamin Grahams, "The Intelligent Investor" he suggests that one should always have a portion of ones savings in bonds. Specifically, he mentions SERIES ...
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2answers
69 views

What is the risk to a high-yield corporate bond fund versus an investment-grade corporate bond fund?

The yield for HYG, a high-yield (i.e. junk) corporate bond ETF, is currently 5.72% versus 3.56% for LQD, an investment-grade corporate bond ETF. Of course, higher yield generally means higher risk. ...
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43 views

Bonds more attractive as Fed get ready to tighten?

Will the return on US treasuries improve vs US stocks as the Fed prepares to raise interest rates?
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48 views

Why are real-term bond yields systematically declining, and what does it mean for investors?

I'm having hard time understanding what is causing the trend below: In theory, since it is inflation adjusted I'd expect the yield to fluctuate with the economic cycle, but not systematically drift ...
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1answer
171 views

Why do both stock and bond seem overvalued in 2014?

The general wisdom is that when stock is overvalued, bond is undervalued, and vice versa. Why are both suggested to be in a bubble in 2014? Also, if one believes in tactical allocation, what asset ...
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78 views

Why aren't muni bond yields driven to the point of indifference?

Why is there any point to munis? By that I mean, why aren't yields driven down to be equal to the after-tax yields of taxable bonds of similar maturities and credit quality? Obviously they are ...
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17 views

Learning Resources For Eurobonds

Please suggest me some books/articles about eurobonds which answer such questions as: what is it, how it works, what are the risks, what are the advantages and so on.
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77 views

What are the risks to using a tax-free bond fund for short term savings (1-2 years)?

I'm saving some money, probably for a down payment house, and I'd like it to earn a bit more return than it would just sitting in cash. I max out my Roth 401(k) and my Roth IRA, so any additional ...
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1answer
228 views

Why are US treasury bonds priced in 32nds?

What is the historical reason for treasury bonds to be priced in 32nds? I have tried using Google and this site to find the answer, but have not been able to find anything definite. Three ...
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33 views

What is the discount rate of a bond by default? [closed]

What's the rate, and what's the compounding (annual, semi-annual)?
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38 views

How do you use the formula for YTM when the compounding is semi-annual?

How do I calculate yield-to-maturity (YTM) with a simple handheld calculator? do we multiply n by 2?
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1answer
101 views

Best way to invest in safe USD bonds for non-US citizens?

I'm a European resident (non U.S. Citizen), I receive my salary in USD. I have opened a USD account at my local bank to avoid exchange fees. I'm having difficulties in finding a decent way to invest ...
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1answer
81 views

Do bond interest rate risk premiums only compensate for the amount investors might lose?

Consider two different bonds: one riskless, and the other risky. Suppose the risky bond has a known probability of default. Suppose a market is made in these bonds, with investors trying to maximize ...
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3answers
98 views

What's the difference between buying bonds and buying bond funds for the long-term?

I know that if I buy a bond and hold to maturity, I will get the value plus the coupon. If rates go up, the resale value of my bond will go down, and vice versa. However, what happens if I buy into ...
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1answer
159 views

Does the uptick rule apply to all stocks/ETFs and other securities, or only specific ones?

Does the uptick rule on U.S. securities apply universally across all stocks, all bonds, all futures and all options? Or is it limited to certain category of securities/instruments? Is there a ...
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1answer
204 views

Bond : Difference between coupon and yield

On a bond chart, I always see the terms: Yield & Coupon, which seem to mean the same thing. What is the difference between these two terms?
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104 views

Bond prices: Why is a high yield sometimes too good to be true?

Thank you for taking the time to explain me this. I'm looking at bonds prices at Yahoo Finance (see attached image) And it seems to good to be true: A-rated bonds at YTM rates of 11% and more. ...
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1answer
40 views

How can I determine if I qualify for a tax exemption on distributions from a municipal bond ETF?

I am interested in two municipal ETFs for my IRA retirement account: NXJ (New Jersey Municipal Bond Fund) and NRK (New York Municipal Bond Fund). I live in New Jersey and NXJ currently has a ...
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3answers
262 views

Issuing bonds at discount - computing effective interest rate

Suppose Southwest Airlines issued $100,000 of 9%, 5-year bonds when the market interest rate is 10%. The market price of the bonds drops, and Southwest receives $96,149. First of all, in my textbook ...
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1answer
38 views

Deflation Risk on TIPS

From P18 in ETF for Dummies, 2nd Ed (2011) by Russell Wild: Such bonds do, however, carry interest-rate risk, and another risk that’s unique to them: deflation risk. If consumer prices start ...
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36 views

Online sites for real time bond prices

In this chart for bonds traded on NYSE it seems a lot of bonds do not have a value for the 'Previous Close'. Considering that bonds trade in the open market like stocks, is there an online resource ...
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1answer
40 views

What do “yield type” and “duration” mean in this table of bonds?

In this table of bonds, what do the columns "Yield Type" (values e.g. "C", "M") and "Duration" mean? I thought "Duration" would be the number of years to maturity, but the values seem to be something ...
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2answers
62 views

What amount will I get back if I hold a bond to maturity?

If I hold a bond to maturity, then on day of maturity, will I get back: The price of the bond at maturity? or, The price I paid when I bought the bond? or, The par value of the bond? My guess is ...
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22 views

Upward Spike in US Treasuries despite S&P Downgrade in August 2011

From P84 in ETF for Dummies, 2nd Ed, by Russell Wild : In August 2011, as S&P downgraded U.S. Treasuries, the stock markets again took a tumble, and — guess what? — Treasuries, despite their ...
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3answers
86 views

Bonds, rates and the way they apply during their lifetime

Thanks in advance to anybody taking the time to clear this up for me. Say I buy a 10 year Bond right now. As time passes and the bond gets within 2 years of its maturity, does the 2 year bond rate ...
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1answer
83 views

What kinds of financial assets have a fixed payment and finite time?

Which kinds of assets have the following properties? Can be bought or sold in some market Pay some pre-specified amount if a pre-specified (but in the present uncertain) event occurs Has fixed ...
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2answers
297 views

Effect of Quantitative Easing on Price of Bonds

I don't seem to understand the effects of QE. Fed uses open market to purchase long-term government bonds which pushes up the demand for bonds and drives up the price of bonds. However, this ...
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2answers
74 views

Why is that we discount all the coupons and par amount of a bond at the same rate?

Why is that we discount all the coupons and par amount of a bond at the same rate, our YTM? If we think of each coupon/par as a strip/single bond on its own, wouldn't then each coupon payment be ...
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1answer
34 views

Stop Order for Bonds

I have a bond and would like to know whether its possible to set something similar to a stop order, i.e. That you make an order to sell the bond if the bond price reaches a specified low value? My ...
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79 views

If a bond has a par value of 1000 and a monthly coupon rate of 3.650%, do I get $36.5 every month until maturity?

I'm looking at bond with CUSIP DSDB66702, which has a monthly coupon rate of 3.650 and a par value of $1000. If I hold this to maturity will I get $36.50 every month before taxes?
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1answer
59 views

Order to sell bond / stock at one of two prices crossed, rather than one price

I am totally new to investing not always have time to monitor the current bond price. I would like to know if it is possible when selling a bond or stock to set a price range, for e.g. To sell if ...
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1answer
640 views

Are Bond Coupons reinvested at YTM

I fail to understand reinvestment of coupons to calculate YTM. I understand that YTM is the rate at which coupon payments and ParValue of the bond are discounted to today.i.e C-Coupon & T-Time ...
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1answer
114 views

Should I always hold short term bonds till maturity?

If one has bought a bond with few years left for maturity and if the yield to maturity (YTM) when the bond was bought was greater than risk free rate (government deposit rates), would it be ideal to ...
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2answers
446 views

Is a “total stock market” index fund diverse enough alone?

I'm just getting into investing (currently small amounts, to increase dramatically when I finish off my moderate interest student loans). From what I've read, index funds are the way to go, and I like ...
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2answers
210 views

Are there bond funds that hold all of their bonds to maturity?

I have a small sum of money that I would like to put to work for the next 5 years and then must be available again for my use. I want to take advantage of good muni rates and their tax advantages, ...
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1answer
80 views

How to get information on e.g. bonds apart from obscure abbreviations?

A fund I'm interested in lists on its website its top holdings in a format like this: UK TSY 2% 2016 2.000% 22.01.2016 My guess is that this is a UK government bond with interest rate 2% and ...
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3answers
484 views

Am I always guaranteed to get my principal back if I purchase a bond?

If I buy a bond at par value (1000 $) and hold it to maturity, is it true that I will get my 1000 back (assuming the company does not default)? I don't get this part because what if: Company does ...
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73 views

What's the value proposition for investing in a note like ASX:AFIG?

First foray into PF, I hope I've followed the rules properly, especially since I'm such a stickler for them over on SO :-) Although I seem to be asking about a specific stock here, I'm really more ...
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2answers
531 views

What do the terms par value, purchase price, call price, call date, and coupon rate mean in the context of bonds?

I am having a hard time understanding municipal bonds. What is the par value vs. purchase price? What is the call date? What is the call price? The coupon rate is just the interest paid out to you ...
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1answer
195 views

Does the Federal Reserve have the power to buy municipal bonds through quantitative easing?

Does the Federal Reserve (or any other central bank in any other country) have the power to buy municipal bonds through quantitative easing? If it does, where would I find out how much?
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277 views

What could happen to Detroit Municipal bonds because of Detroit's filing for bankruptcy?

It seems like there's a massive sell off of bonds at this time, such as the municipal bond listed here, for Detroit, Michigan: MunicipalBonds.com – DETROIT MICHIGAN SERIES A - 251093XY1 What ...
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1answer
67 views

How much principal do I get back with a target-maturity ETF?

Can you someone please explain how much principal (or final distribution) I get back when this target-maturity ETF "matures" and makes final distributions (assuming no default)? Assume I own 1 share. ...
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1answer
2k views

How does the 10 year U.S. Treasury bond work?

Can someone explain to me how these bonds work? Are they released to the public at a certain price (face value) and interest rate, and the face value is what traded on in the market place, resulting ...
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4k views

Why do 10 year Treasury bond yields affect mortgage interest rates?

Why is it that when the yield on a Treasury bond increases (because people are selling their bonds, I believe), mortgage rates increase as well? Is there any sort of inherent connection between them? ...
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1answer
303 views

Are coupons from bond ETFs reinvested?

I am trying to determine if all of the coupons of a bond ETF are paid out to investors as dividends, or if some of the income is used to purchase more bonds. I am guessing that this is somewhat ...
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65 views

Questions about government bonds that have already matured

I have a family member that holds some bonds issued on real paper (like from trees). I have a few questions about mature bonds: Does a person have an indefinite period of time to cash them in? ...