Questions tagged [bonds]
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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Why doesn't a bond's dirty price account for all coupon payments?
I've been learning about bonds' dirty prices from this video. The dirty price is the clean price plus any money that has theoretically accumulated since the last coupon payment. I'm wondering why the ...
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Why doesn't my bond ETF provide a hedge against stock indexes in the way I thought it would?
I own BND in an attempt to hedge my portfolio against my stock ETF declines, based off of the Bogleheads philosophy. I've noticed that with this ETF, over the relative long term, I've made but modest ...
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In what cases is it profitable to sell currently-held bonds in favor of buying newly issued bonds?
Assuming there is no arbitrage, and say the Federal Reserve hiked rates from, say, 2% to 3%. I am holding a US treasury bond with a YTM of 2% (before the drop in price due to the rate hike).
If I am ...
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Calculating Bond YTM for different maturities
I'm a bit confused on how to calculate the YTM of a bond with less than a full coupon's worth of periods remaining.
If I have a bond with 7 months to maturity with the next coupon payment due in 1 ...
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If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?
Let’s say I have a loan at 3% for 10years for $100,000. After one year rates in the Loan market rise and are at 6% for the same type of loan. Why wouldn’t the payoff amount of the loan be discounted ...
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What's the benefit of buying municipal bonds on the secondary market?
"Buy munis!", they say... "they're tax exempt!", they say... but are they? It looks like you're paying income tax on most of the Yield To Maturity (since interest rates have gone ...
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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.
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If interest rates remain the same, what effect would this have on long term treasuries?
I'm interested in gambling a few thousand on TMF, a triple-leveraged 20+ year bond fund. It tracks the daily returns of the ICE US Treasury 20+ Year Bond Index.
If the Fed neither raises nor lowers ...
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Are there any benefits to purchasing T-bills directly from TreasuryDirect?
I have been purchasing T-bills from TreasuryDirect, but I recently realized that I can also purchase new issue T-bills from Fidelity. The UX is better and when the money is between bond auctions, it ...
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What is the probability of each tier of creditor/equity claims being made whole?
In bankruptcy, the broad "tiers" for debt settlement are:
Secured debt (going in order of first lien to second lien and so on)
Priority unsecured debt
General unsecured debt
Preferred ...
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Tbill Rollover Interest
I am buying 52 week t-bills with one rollover through Treasury Direct. Being OID interest based, when I reinvest, will I be investing the full maturity t-bill value in my reinvested t-bill or will I ...
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For this I-bond calculation there's a tiny adjustment to the rate (fixed rate x semiannual inflation rate) it barely changes the rate.Why is it there?
From https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/#cerates
Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation ...
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Why is anyone buying Japanese bonds given that yield less than 1%?
As per the best data I can find online, Japanese 10yo bonds have a yield of less than 1%, which is lower than yields for US and German bonds. Additionally the yen is experiencing rapid inflation at ...
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Why is this T-Mobile bond priced so low?
T-mobile Bond: https://markets.businessinsider.com/bonds/t-mobile_usa_incdl-notes_202020-26_regs-bond-2026-usu88868ag68?miRedirects=1
So the current price is 39.20.
It has a coupon of 1.5%, and will ...
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Why is the price of a 1 year to maturity bond so high?
I am looking at the 2½% Index-linked Treasury Stock 2024 bond and I can't understand why its price is so high (£377). There is only a year left!
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Do I have to wait until a Treasury Bill auction date to buy a 52-week non-competitive bill, and will reinvesting give me the same rate a year later?
I am considering purchasing through TreasuryDirect, a 52-week Treasury bill which is scheduled for auction Aug. 8th (2023). When can I actually submit my purchase? Should I wait until the latest in ...
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Optimizing between Mortgage and Bonds
Lets say I have $1 million owing in my mortgage, current variable rate of 6.1%, remaining amortization 38 years. I also have 1$ million in GIC (basically bonds where the coupon can get added to ...
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What happens if the volatility in the equity market increases? Does interest rates move up or down?
I think both can happen and here is my reasoning. Please correct me if I am wrong.
During times of increased volatility in the equity market, investors adopt a more risk-averse approach and gravitate ...
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Putting down payment to work
We have planned to buy a house but with such high rates that did not happen. We would have to wait until rates are lower. I planned to use the down payment money to invest in Ig 3-5y corporate bonds ...
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betting on rates going down using bonds
There is a strategy that I am thinking of and would love to know about downsides: people buy/sell bonds to have a guaranteed return if held to maturity. But they also buy to take a directional view on ...
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US Treasuries, explanation of numbers listed in IBKR
I've been recently reading about treasuries and trying to understand how they work. In particular, within IBKR I can search for US treasuries and get the numbers listed in the screenshot.
What I've ...
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If I'm selling a bond, am I selling back to my broker or the market?
From my limited understanding, if I were to purchase a corporate bond for example, the process goes like this:
Other Brokers -> My Broker -> Me.
The Other Broker sells it to My Broker with a ...
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What is the actual price I would pay for this bond? (Bond bid-ask spread)
From what I understand about corporate bonds, there can be three prices: the current price, the bid price, and the ask price.
So a corporate bond can have a current price of 99.01, a bid price of 98....
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Bond etf with duration range
How do they construct etf with say 2-3y duration. I would understand the idea is to create a basket of bonds with such duration and keep it for 2-3y until they all mature to realize the expected book ...
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is the treasury bill portion of a bond fund subject to state/local taxes?
Assume we have some fund (like a money market fund) with x% of the capital in treasury bills. Treasury bills are not state or local taxed.
If I invest some capital into this fund, is my entire portion ...
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How to estimate the price of a US Treasury
If you go to savingsbond.gov, choose the date 2023-07-17 and look at the CUSIP 91282CBM2, you'll see that it has a rate of 0.125%, a maturity of 2024-02-14, and a sell price of 97.03125. It's a 3 ...
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Questions relating to a novel asset pricing model
I'm creating a pricing model for an asset that is similar to a bond, but there are some quirks that I'm unsure how to work out. The asset is a tax lien, in which delinquent tax bills (usually on ...
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Interest rates effect on bank jobs and junk funds from the book intelligent investor
On chapter 6 of the intelligent investor with commentary by jason zweig Pg:147 is discussing about junk bonds. I ran through the text however I have some curiosity that I want to get addressed.
Here ...
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Questions about bond ETF
What happens when a bond expires? Will the mangers typically buy similar bonds or will they payout the cash (and hence the bond ETF will have a natural expiration)?
So the difference between ...
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Why do secured bonds have less default risk than unsecured bonds?
Why do secured bonds have less default risk than unsecured bonds?
Secured bonds are backed by specific assets of an issuer while Unsecured bonds are backed by all assets of the issuer - so shouldn't ...
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How to interpret auction/issuance results?
If a new bond (issuance size of 300M) was 3X covered and had 40 buyers, what does it mean?
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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....
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How does a rollover work with Bonds?
I understand how a rollover works with personal loans. An easy example would be a car. Someone wants to buy a new car, but they still have an outstanding balance on their current vehicle. So the ...
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Is it worth it to diversify the "risk-free" portion of a portfolio across multiple assets?
I am looking into the constructing of my own sort of "structured product" and have been thinking about the risk profiles of the "risk-free" portion of products like this.
Generally,...
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How to understand this investment portfolio list?
I have a table with the colunmns ISIN, Asset Class, Description, Nominal/Quantity, Market Value CHF. I would like to check how much is invested in a specific company, let's say Boeing. How do I find ...
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Bond interest reported on Box 3 of a 1099-MISC
A friend of mine has a significant amount of variable interest bonds. In certain cases, I believe the issuer could have paid the bond off with stock. His broker reported the interest on these bonds on ...
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Question about bonds coupon rate vs. interest rate
I'm new to this subject, but from looking around the internet, I know bonds have a coupon rate that is predetermined. However, the actual interest rate could change due to government and/or market ...
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Are Bonds holder paid before Stock holders in USA unlike Europe AT1 Bond holders?
I see news that AT1 holders of Credit Suisse , a type of bonds that were a solution to 2008 crisis.
...They were created in the wake of the 2008 financial crisis as a way
for failing banks to absorb ...
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What does the EE stand for in EE bonds?
I wonder what the letters "EE" represent in "EE bonds", i.e. whether it's an acronym and if so, what the full form of the EE acronym? I searched quite a bit and couldn't find the ...
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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 ...
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What's the real yield on this bond?
I've never bought bonds before and I'm looking into US Treasuries. The 3mo treasury below is described as having a ~4.9% yield. How is this number derived?
To me, it looks like if I buy this note with ...
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What part of the auction process for U.S. Treasuries makes it impossible to enroll in the auto-rollover feature after the initial order entry?
When trying to activate auto-rollover for an already purchased Treasury security on Schwab, I get the message:
This security is ineligible for auto-rollover. Due to the nature of the auction process ...
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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.stack.imgur.com/GNt20.jpg (...
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What are the pros and cons, if any, of purchasing Treasury securities at a reopened auction (vs. a new, non-reopened auction)?
I read on treasurydirect.gov:
When we hold a reopening auction, we are selling additional amounts of a previously issued security.
This is reflected in the Tentative-Auction-Schedule.pdf.
What are ...
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Is it financially preferable to purchase Treasury bonds on the primary market or on the secondary market? [duplicate]
Assume a retail investor who:
can purchase Treasury bonds on the secondary market through their broker without any fees or markups (e.g., via Charles Schwab).
can only submit non-competitive bids ...
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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 ...
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Why does buying Treasury bonds on the secondary market make it easier to sell Treasury bonds at a later date?
I read:
Buying on the secondary market also makes it easier to sell Treasury bonds at a later date.
Why does buying Treasury bonds on the secondary market make it easier to sell Treasury bonds at a ...
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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 ...
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Are there any downside in investing in a municipal money fund instead of purchasing municipal bonds assuming the money fund's yield > muni bond yield?
I wonder whether there exists any downsides in investing in a municipal money fund instead of purchasing municipal bond, assuming the money fund's yield (tax-free) is higher than the muni bond yield (...
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How should I invest if I have much disposable income and cash on hand?
I'm a 29-year-old living in Europe and I'm looking for some investment advice.
I’m fortunate enough to be earning roughly $28k per month after tax, and I currently have about $400k in cash sitting in ...
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