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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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treasury bond future confusion

I'm not really understand how treasury bond futures work. Take the 10-Year T-Note Futures. Currently, it lists that the June 2024 one is settling for $109,000 (and each T-Note has a face value of $...
APerson's user avatar
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1 answer
81 views

Do Treasury Inflation Protected Securities (TIPS) pay variable interest?

My Securities Industry Essentials License Exam Manual from Kaplan says the following: However, Investopedia says: As a result, investors receive higher interest or coupon payments as inflation rises....
Cotton Headed Ninnymuggins's user avatar
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0 answers
40 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 ...
Hank's user avatar
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0 votes
2 answers
43 views

How to reconcile bond duration with yield responses in Long-Term vs Short-Term bonds?

I'm struggling to reconcile two aspects of bond behavior in response to interest rate changes: Longer-term bonds have higher durations, implying greater sensitivity to interest rate changes, which ...
StatsScared's user avatar
1 vote
2 answers
95 views

How can I know the historical returns for a Vanguard bond fund, disregarding changes in share price?

This question is really about bond funds in general, but Vanguard funds are what I have experience with, so the details of my question and screenshots will be specific to them. But I hope this ...
Brian Rak's user avatar
  • 298
4 votes
2 answers
630 views

Is it feasible for a small retail UK resident to buy UK inflation-linked GILTs directly from the issuer?

I'm interested in buying individual inflation-linked GILTs directly in the primary market (directly from the UK Debt Management Office). To give some context, I want to do this as I understand the ...
Martel's user avatar
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1 vote
1 answer
56 views

1099-int concern, tax filing

My credit union issued me a 1099-int for savings bonds that were cashed in 2023. Is it correct to say that box 3 of the 1099-int be the total of the interest earned plus half the face value of the ...
user avatar
3 votes
1 answer
48 views

Where to find the variable interest calculation formula for a bond?

I am a relatively new investor based in Germany and am trying to decide whether to put some money (intended for a house downpayment in 3-4 years) into government bonds. For example this one: https://...
Harry Matthews's user avatar
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. ...
StatsScared's user avatar
1 vote
1 answer
84 views

Clarification on the 6-Month Yield Point on the US Treasury Yield Curve

Can the 6-month yield point on the US Treasury Yield Curve represent yields from securities originally issued with longer maturities (e.g., 1 year) but now have only 6 months left until maturity? ..Or ...
StatsScared's user avatar
-4 votes
2 answers
194 views

Unintentionally bought 10kUSD of I bonds with a few cents: how can I correct my mistake and properly purchase 10kUSD of I bonds?

I bought 10kUSD of I bonds via treasurydirect.gov. The bank account I mistakenly used to purchase the bonds only had a few cents. To my surprise, my account on treasurydirect.gov indicates that the I ...
Franck Dernoncourt's user avatar
0 votes
2 answers
70 views

Bond return in low-rate environments

Assume a simplified world where rates are 0 %, and bonds only carry rate risk (no spread risk, etc). Let's say I invest in a 10-year bond. After 1 year has gone by, if rates have gone up, I've ...
ammo 45's user avatar
0 votes
1 answer
88 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 ...
EE18's user avatar
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0 votes
2 answers
78 views

Price for a bond that was issued in the past?

I understand that for US treasury bonds, that the price, its current yield and annual coupon is related by price = coupon/yield. But the prices and yields when I look them up online are always denoted ...
Mikkel Rev's user avatar
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1 answer
80 views

What does Takeout and Putup mean?

What does takeout and putup values mean in fixed income trade and how would you interpret these values?
the_brass_bottle's user avatar
0 votes
2 answers
266 views

Why is bond issue price lower than 100?

I have a question about this bond: https://markets.businessinsider.com/bonds/braskem_netherlands_fin_bvdl-notes_202323-31_regs-bond-2031-usn15516ah53?miRedirects=1 If you look to the right, you can ...
ronald christenkkson's user avatar
3 votes
2 answers
105 views

Which of my tax-advantaged accounts should I hold my bond market index funds in?

I have traditional, Roth and SIMPLE IRAs. I'd like to get some total bond market index funds (VBTLX). In terms of taxes, gains, dividends, etc. is there any difference between holding the fund in a ...
pixelearth's user avatar
3 votes
2 answers
207 views

Does the capital gains tax apply this tax year or next if I initiated a sale today but it won't complete until the new year?

I have tried several Google and Stack Exchange searches, and I tried looking through the IRS website, but I haven't found anything that answers my specific question. I may have made a mistake. Last ...
CPomerantz's user avatar
3 votes
2 answers
527 views

Why Wouldn't A Bond Issuer Call A Bond When Rates Fall?

See CUSIP 172967AS0, issued by Citigroup in 1998, with a 6.875% coupon and a maturity date in 2098, a 100-year bond. Fidelity says this bond is continuously callable, so why didn't Citigroup call it ...
Sam Skuce's user avatar
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1 vote
0 answers
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What are gross concessions on filling 424(b)(2)?

In this filling, for the bond with CUSIP 92346MLS8, the "Gross concession" is 3.150%. Is this the total fee paid to issue the bond? Why is it so high for a bond with a fixed 5.3% coupon?
Tiago Bértolo's user avatar
4 votes
1 answer
623 views

Why does SGOV pay dividends twice in December?

The US ETF SGOV pays dividends once a month from Feb. to Nov, then twice in December. Why? I'm reading it may be for tax reason. If that's correct, what's the tax reason? From https://seekingalpha....
Franck Dernoncourt's user avatar
1 vote
1 answer
179 views

Can F1 Student Resident Alien Buy From Treasury Direct?

I've been in the United States for 10 Years now on F1 VISA. I've filed taxes and got a SSN 5 years ago. I have a drivers license and an EAD. I'm a resident alien for tax purposes. Can I open an ...
Terry W's user avatar
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3 votes
2 answers
467 views

Yields and prices when consider demand and supply

I know the relationship between price and yield for a simple coupon bond. When the rates go down price goes up. However, when rates go down, I assume bonds are less attractive and as a result the ...
Medan's user avatar
  • 553
0 votes
0 answers
39 views

Choosing government bonds of similar maturity to hold to maturity, shall I just go for the highest YTM one

I wanted to buy some government bonds of roughly 3yrs to maturity and planned to hold it to maturity. My bank's app showed 3 bonds of that maturity but one is 0.1 percentage points higher in YTM. Is ...
jf328's user avatar
  • 224
0 votes
1 answer
42 views

Why are these bond portfolio prices equal (case study on 2012 Greek debt restructuring)?

Consider the following case study from Berk and DeMarzo's Corporate Finance. My question is about the first sentence in the last paragraph: Assume that participation in the swap was voluntary (as ...
EE18's user avatar
  • 121
0 votes
1 answer
136 views

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 ...
Enter4343's user avatar
13 votes
4 answers
3k views

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 ...
Ken - Enough about Monica's user avatar
2 votes
1 answer
88 views

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 ...
rb612's user avatar
  • 161
0 votes
1 answer
61 views

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 ...
LitRan's user avatar
  • 1
2 votes
5 answers
723 views

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 ...
DungenessCrab's user avatar
1 vote
1 answer
125 views

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 ...
RonJohn's user avatar
  • 50.7k
1 vote
1 answer
148 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.
ZEWEI CHU's user avatar
  • 111
1 vote
1 answer
1k views

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 ...
Enter4343's user avatar
4 votes
1 answer
485 views

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 ...
JobHunter69's user avatar
0 votes
2 answers
73 views

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 ...
MegaZeroX's user avatar
  • 143
1 vote
1 answer
106 views

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 ...
Kevin Spalding's user avatar
2 votes
2 answers
221 views

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 ...
Emery Lapinski's user avatar
0 votes
1 answer
577 views

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 ...
JonathanReez's user avatar
  • 5,862
13 votes
1 answer
6k views

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 ...
ronald christenkkson's user avatar
1 vote
1 answer
194 views

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!
Medan's user avatar
  • 553
2 votes
1 answer
646 views

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 ...
josh's user avatar
  • 153
0 votes
2 answers
135 views

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 ...
Crunk_Cat's user avatar
0 votes
1 answer
61 views

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 ...
CountDOOKU's user avatar
1 vote
1 answer
210 views

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 ...
Medan's user avatar
  • 553
1 vote
1 answer
135 views

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 ...
Medan's user avatar
  • 553
3 votes
1 answer
284 views

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 ...
Tsaras's user avatar
  • 133
0 votes
3 answers
134 views

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 ...
ronald christenkkson's user avatar
0 votes
1 answer
571 views

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....
ronald christenkkson's user avatar
2 votes
1 answer
70 views

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 ...
Medan's user avatar
  • 553
6 votes
2 answers
397 views

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 ...
JobHunter69's user avatar

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