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 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
58 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
66 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
87 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
139 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
182 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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97 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
39 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
87 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
35 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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2answers
32 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
25 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
58 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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2answers
21 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
72 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 ...
2
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1answer
81 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
257 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
70 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
33 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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1answer
77 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
58 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
432 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
105 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
324 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
198 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
77 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
430 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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0answers
64 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
426 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 ...
2
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1answer
183 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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247 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
63 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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5answers
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? ...
2
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1answer
234 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 ...
2
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1answer
59 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? ...
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1answer
259 views

Where can I find historical United States treasury note volume?

I want to find the historical data for how much the government had to finance each year. How much 10-year note, how much 30-year note and how much 1, 2, 3, 5 year note? I mean annual data. I didn't ...
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1answer
482 views

How do I calculate the total return on a bond series given its yields?

How do I calculate the total return on a bond series given its yields? Is there an equation? I looked at this Investopedia article, but it only refers to stocks in general.
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3answers
277 views

Why did one-year notes pay more than 10-year notes during the 1980's crisis?

Why did one-year notes pay more than 10-year notes during the 1980's crisis? During the early 1980's, one-year T notes paid more than the 10-year T note, which implies that nobody wanted to buy the ...
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1answer
43 views

U.S. Bonds Taxed Interest and Current Value

Series EE Bond just matured and I cashed it in. The current value that I received in cash was only a little more than the original face value. However, the interest I am paying taxes on is half the ...
2
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1answer
68 views

How can I estimate the sensitivity of a bond ETF's price to interest rate changes?

Is there a standard method for estimating the sensitivity of a bond ETF's price to interest rate changes? Some of the information I have includes the average duration and the SEC yield.
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1answer
486 views

Yield of a municipal bond with a sinking fund?

How do I calculate my expected return if I buy a municipal bond at a premium with a sinking fund feature? For example, I'm looking at a bond with a coupon of 5.5%, maturing July 2015, with the ...
7
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1answer
356 views

How much in inflation protected securities (TIPS) should I buy?

I'm wondering whether it's worthwhile to allocate some of my bond portfolio in the Vanguard TIPS fund. I plan to work until about 2040, and I prefer (efficient) risk over return. I plan to buy and ...
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2answers
365 views

What is the compound annual growth rate of the major markets?

What historical compound annual growth rates (CAGRs) have the major markets provided? Data as far back as has been recorded is preferable. Specifically I'm looking for returns of: Short-term, ...
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2answers
351 views

Is there a fool-proof way to keep up with inflation? [duplicate]

I know I can keep cash in an interest-based bank account, but that type of investment will not keep up with inflation, it seems. Would I be right to assume that government/corporate bonds can keep up ...
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1answer
51 views

How to find out if a company has purchased government (or other) bonds?

Looking at a company's income statement, balance sheet, and cash flow, is it possible to find out if a company has given out a loan to a government or to another business, i.e. government/corporate ...
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2answers
77 views

International bonds, currency differences, and effect of inflation on such bonds?

Country X's national government purchases country Y's government-issued bonds. Would the bonds be issued in country Y's currency? How does inflation (of either country's currency) factor into this, ...
2
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1answer
284 views

Free source of corporate bond data?

Are there any free sources of corporate bond data? More specifically, I would like information about new/upcoming issues (but if something like this exists for secondary markets I would be interested ...
2
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1answer
106 views

Most cost-effective way to purchase individual bonds?

I am trying to determine the most cost effective way to go about purchasing individual corporate and municipal bonds that I intend to hold until maturity. Is there great variation in the fees and ...
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2answers
192 views

How is investing in a bond fund different than investing in a stock?

You don't have the option to "hold it till maturity", so you are invariably exposed to interest rate risk, and as a consequence, you will probably gain or lose on your principal in the end. Isn't it ...