All Questions
80 questions
1
vote
1
answer
170
views
Simple YTM calculation
I'm working the following problem, but getting the wrong answer. Any feedback appreciated.
Suppose you bought a five-year zero-coupon Treasury bond for $800 per
$1000 face value. Assume the yield to ...
- 11
2
votes
1
answer
1k
views
Is the yield of a 30-year bond, issued 29 years ago and maturing in 1 year, equivalent to that of a 1-year bond maturing on the same date?
The question assumes both bonds are US Treasury bonds.
I'm seeking clarity on whether the difference in original issuance date and remaining time to maturity impacts yield parity between these bonds.
...
- 495
0
votes
1
answer
157
views
On coupon rate versus yield
I have seen the following roughly spelled out (or else tacitly used) in a few of my finance textbooks and I was hoping for confirmation and, ideally, a proof:
Coupon rate equals APR of yield if and ...
- 121
1
vote
1
answer
247
views
Why MBS has lower YTM than treasury bonds?
I just checked, VMBS (Vanguard MBS) has yield of 3.73%, but VGLT (Vanguard government long term bond) has yield of 5.08%. I thought MBS is riskier and would require higher YTM by the market.
- 111
0
votes
1
answer
1k
views
How to read CDs: price vs yield vs bid vs ask?
I'm trying to understand CDs by comparing the two:
NAME
CLOSING PRICE
CLOSING YIELD
CURRENT BID YIELD
CURRENT BID PRICE
CURRENT ASK YIELD
CURRENT ASK PRICE
Mountain Commerce Bank
99.68
5.694%
99....
- 298
1
vote
2
answers
120
views
How is the yield of this particular bond calculated?
I am looking at this particular bond of coinbase company via Interactive Brokers website.
Coinbase Bond ISIN : USU19328AA89
The rate of the bond is 3.4 so at the ask price of the bond at 62 the yield ...
- 13
-3
votes
3
answers
401
views
Why is YTW (Yield-to-Worst) not available for some callable bonds?
E.g., I am looking at 67765QDG8 ("Oh St Wtr Dev Auth REV 5% 06/01/2023") on Schwab. It is callable but the yield to worse isn't indicated:
Bond details: https://i.sstatic.net/GNt20.jpg (&...
- 11.5k
0
votes
1
answer
168
views
Where can I find the indicative yield of soon-to-be-issued Treasury bonds on Charles Schwab?
In Vanguard, one may see the indicative yield of soon-to-be-issued Treasury bonds on https://personal.vanguard.com/us/FixedIncomeTrading:
Where can I find the indicative yield for soon-to-be-issued ...
- 11.5k
0
votes
1
answer
72
views
How can one compare the yield of a municipal money fund with the yield of a municipal bond?
Let's consider the following municipal money fund and the following municipal bond:
The Schwab Municipal Money Fund (Investor Shares) (SWTXX) discloses a 7-day yield (with waivers) as of 02/28/2023 ...
- 11.5k
1
vote
1
answer
160
views
What accounts for the difference in yield to maturity (YTM) between brokered CDs and US Treasuries?
Looking at the Charles Schwab table below dated 2023-02-24 on the yield to maturity (YTM) for different brokered CDs and bonds, I see that for when the maturity is 1 year or higher, brokered CDs have ...
- 11.5k
2
votes
1
answer
48
views
How is the Price/Yield Duality Affected By Time?
A rise in interest rates causes a rise in bond yields which means their price goes down. And the opposite, of course.
What I'm trying to understand is how the price of an ETF will change after the ...
- 225
1
vote
1
answer
101
views
Yield curve to price bonds
I am having a hard time finding books/materials that would teach yield curve pricing using real-world problems/examples
I would like to understand if can I use the below treasury yield data (I believe ...
- 13
1
vote
2
answers
141
views
What would be the instrument/index with the most historical data available for something similar to TLT aka a bonds fund? [closed]
I would like to have as much historical data as possible regarding a bonds fund performance similar to the iShares 20+ Year Treasury Bond ETF (TLT).
For now I have this source but it goes back to only ...
- 21
1
vote
1
answer
199
views
Proper Way To Price a Bond Paying a Semi-Annual Coupon
Let's say you have a 10-year bond with a $100 face value that with a coupon rate of 10%, paid semi annually. The bond is currently price at $105. Which is the proper way of calculating the yield to ...
- 111
2
votes
1
answer
312
views
What is the correct formula for Bond Yield?
Taking an introductory investment course, was following up on bond yields.
I thought the yield is calculated as follows (sorry for some reason LaTex formatting doesn't work - so inserting an image):
...
- 197
1
vote
0
answers
54
views
Need help understanding bond yield outliers
I was looking at bond yields on Fidelity and noticed a few outliers.
The tables below show the 'Highest' and 'Median' yields.
Note the outliers - Agency/GSE 10yr and Corp AAA 2yr - where the highest ...
- 111
2
votes
1
answer
146
views
Why are long term bonds subjected to a higher volatility, as well as higher yield than short term bonds?
Why are long term bonds subjected to a higher volatility, as well as higher yield than short term bonds? (Assuming normal yield curve). Say, I have 2 investment options and my investment horizon is 2 ...
- 21
3
votes
1
answer
234
views
Why is there a sell off of US bonds if interest rates in the US are currently rising?
My understanding is that as interest rates go up, the yield offered by bonds also increases (in response).
If the yield of bond increases, then why are people selling bonds?
- 495
1
vote
2
answers
110
views
Why do raising short-term yields indicate that the economy is about to enter a recession?
Below is the excerpt from the article Term Structure Of Interest Rates
Downward sloping — short-term yields are higher than long-term yields. Dubbed as an "inverted" yield curve and ...
- 185
1
vote
2
answers
77
views
Compute coupon of treasuries
How do you compute coupon starting from yield and price? Since yield is coupon / par, which is 2 / 100 in this case, would it just be yield * price, 0.01906 * (102 + 1 / 32) with the data below? ...
- 11
0
votes
1
answer
51
views
Positive movement vs negative movement of bond market yield
In the example on this page, a yield was issued at a yield of 7.18% at the beginning of a year and was forecasted to have a yield of 6.8% at the end of a year.
The resulting value gain from the ...
- 161
3
votes
1
answer
174
views
Ask & Bid yield calculation problem
Does anyone know how the ask and bid yields are calculated on this corporate bond?
I tried to use BEY calculation but I keep arriving at different answers.
Does anyone know what the $500K means?
If ...
- 31
2
votes
1
answer
131
views
TNote 10yr Futures YTM vs market yield?
I understand how to calculate the yield on a 10 yr TNote based on face, price & coupon.
I don’t understand why the yield (and price) on a futures contract about to expire is so different than the ...
- 21
0
votes
1
answer
360
views
How to calculate the new price of a bond if its YTM increases?
I'm trying to calculate the current price of a corporate bond one year after its YTM has changed.
A corporate bond was issued at 01/01/2010, has the following caracteristics:
A face value of 5000$.
...
- 103
2
votes
2
answers
74
views
What is the best way to interpret changes in Treasury yields?
My question is quick and simple. However, I would like to use this answer to further my understanding of bonds and yields.
If the YTM on a 10yr Note yesterday was 1.00% and the YTM on the same 10yr ...
3
votes
2
answers
291
views
Logic behind inverse relationship between bond rate and interest rate
I've been reading that there is an inverse relationship between fixed-rate bonds and interest rate. The explanation behind the reasoning is that as interest rates move, the bond has to compete with ...
- 133
0
votes
0
answers
54
views
Calculating bond duration and price change when yield changes
I've been working on this forever and I'm still not sure if my answers are correct. My question is:
A 10 year bond with a face value of $1000 paying semi-annual 7% coupon. Bond is paying 7% YTM.
...
- 1
0
votes
1
answer
795
views
Given two similar bonds, is the one with a higher yield to maturity (YTM) always a better investment?
Consider two bonds that have the same issuer, seniority, credit rating, and maturity date. My question is about the comparability of their yield to maturity (YTM): if one bond has a higher YTM the ...
- 17.2k
2
votes
0
answers
71
views
What drives long duration US Treasury Bond ETF prices?
I am looking at TLT, for example, a long duration (with average maturity around 25 years) bond ETF. I noticed that the fed funds rate (or the "interest rate" from federal reserve) has been ...
- 291
0
votes
1
answer
47
views
Why is a put on yields equivalent to a call on bonds?
Nassim Taleb makes the following assertion in Dynamic Hedging:
A put on yields is a call on bonds, a matter of confusing importance.
But I struggle to understand why that is the case.
If I buy a put,...
- 1,307
0
votes
1
answer
162
views
Difference between the Interest rate of bond and the interest rate of central bank
Does the increase or decrease of the Interest rate (coupon rate) of bonds have the same effect as rising or falling interest rate of the central bank on the economy? In other words when we say that ...
- 69
0
votes
2
answers
86
views
How to read/decipher the percent % in a bond's interest versus coupon rate question or example
I was studying about bonds, more so accreted/coupon bonds that were discounted. As far as I know and believe to be true is that when a question says:
1) Q. "Mr. Dancer purchases a 5-percent ...
- 133
2
votes
1
answer
214
views
Net Bond Coupon/Yield
I just wondered on how one can properly get the Net Bond Yield/Coupon given that you had some "trading" that happened.
Suppose, I have a group of bonds (say some Treasury bonds).
I acquired a 100 Par ...
- 21
3
votes
1
answer
192
views
What determines the interest rates of government bonds?
It's not clear to me how the interest rate of a specific government bond changes. I would like to make a comparison with cryptocurrency exchanges.
Consider, for example, the price of bitcoin on ...
- 193
1
vote
1
answer
137
views
Why do bond & treasury yields drop as more people invest in them?
I thought bond and treasury yields were supposed to be stable till maturity date.
Yet we often see reports like this:
Market upheaval intensified Friday as stocks and oil prices tumbled,
while ...
- 733
0
votes
0
answers
142
views
What do bond investors do during a sell-off
Suppose there has been some release of data that shows economic slowdown, or increased expectations of inflation. Investors will then sell their bonds in hope of buying newer bonds with higher ...
- 271
5
votes
5
answers
448
views
Which yield curve is inverting?
All over the news I read that the yield curve is inverting.
I thought they were talking about the US Treasury Bond yield curve.
This seems to be the case when I read this article.
However there are ...
- 61
1
vote
2
answers
152
views
Do negative bond yields pay out public debt?
I noticed that german bonds offer negative yields, as you can see in this table.My question is, considering Germany is returning less money than received, does that mean the sovereign debt is ...
- 193
0
votes
3
answers
211
views
Does yield curve inversion refer to the shape of the curve, or just its sign?
Yield curve inversion has recently been talked about as an indicator for recession. Mostly, I've heard this described as "10-year Treasury rates fall below 2-year Treasury rates."
I would expect ...
- 179
1
vote
4
answers
294
views
Locking in rates during yield curve inversion
While reading multiple articles about yield curve inversion, a common theme is that investors seeing an economic slowdown in the future which generally means lower interest rates so they want to lock ...
- 271
3
votes
2
answers
274
views
How to interpret negative bond yield quote
I am trying to understand investing in (non-us) government bonds.
Looking at data I can find online regarding the bonds available in my broker is giving me information I can't make sense of.
For ...
- 31
4
votes
4
answers
1k
views
If Turkey doesn't go bankrupt, is there any chance they won't pay bonds profits?
Suppose I buy 5000$ worth of Turkish treasury bonds today and the yearly interest rate for 1Y bonds is roughly 25%. Assuming Turkey doesn't go bankrupt in the next year, is there any chance I won't ...
- 193
1
vote
1
answer
83
views
Bond prices changing due to interest rates
I feel as if I'm missing a fundamental step here. I'm aware that bond prices fall as yields go up; but what makes yields go up?
If I had a bond issued in the UK for example, and the base rate went up ...
- 133
1
vote
2
answers
499
views
Why don't investors in negative-yielding government bonds put money in positive-yielding government bonds instead?
According to this news article, USD10 trillion has been put into negative-yielding long-term government bonds.
https://www.ft.com/content/b131da2e-4f02-11e9-b401-8d9ef1626294
Why don't these ...
- 2,185
2
votes
3
answers
237
views
How does a bond's coupon rate differ from its market yield rate?
I'm trying to understand how bonds work and am confused by coupon rate vs market yield rate.
Suppose company Foo issues a bond with a face value of $1 million, a 4% annual coupon rate payable semi-...
- 153
0
votes
2
answers
714
views
Holding period return and YTM
Suppose I purchased a 2 year bond at par $1000 paying 10% annually. Then the YTM is 10% but the holding period return would be 20%. Shouldn't those 2 values be the same since I am holding the bond to ...
- 271
0
votes
1
answer
70
views
Effective Yield for Bonds
While reading up on the effective yield for bonds I noticed that it relies on the fact that the investor reinvests their coupon earnings in order to take advantage of compound interest. However, does ...
- 271
1
vote
3
answers
126
views
Is a bond's price dependent on yield or is it the other way?
Do changes in the price of a bond cause the yield to move? Or is it the change of rates and consideration of other risks that cause the yield to change which then affects the price of the bond?
- 271
1
vote
3
answers
90
views
Which type of yield do finance professionals refer to when talking about "bond yields"
I am aware that there are many different ways to measure a bonds yield including YTM and the Current Yield.
However I am not quite sure which yield is being referred to in a yield curve and other ...
- 271
2
votes
2
answers
241
views
Bond yields vs interest
At least from the US Treasury, why is there a yield AND interest rate when auctioning notes?
https://treasurydirect.gov/indiv/research/indepth/tnotes/res_tnote_rates.htm
I'm under the impression ...
- 123