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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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1answer
52 views

Bond - Coupon Payments

How does the periodicity of Coupon Payment affect the YTM of a bond? For example, if I buy a bond that pays 10% Coupon Semi-Annually whose Face Value is 100, and if the same bond pays 10% Annually, ...
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72 views

Finding the yield on individual corporate bonds

I'm looking at an individual corporate bond (20341WAD7) with a 8.25 coupon trading at a last price of around 88 cents on the dollar (88/100). By my simple math the yield should be 8.25%/.88 = 9.375%. ...
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1answer
44 views

Why Can't Some Commercial Bonds Be Bought Through Major Brokers?

I am interested in buying a commercial bond issued by a coal mining company. The CUSIP is 62704PAM5. I searched online at tdameritrade.com and was not able to find the bond using their bond search ...
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63 views

Bonds - Yield to maturity change

How can yield to maturity change? For example, if i buy a bond at par value of 100, for a coupon rate of 10% and i hold the bond till maturity. will the yield to maturity remain at 10%? how does YTM ...
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2answers
175 views

Balanced index fund that tracks S&P 500

I'm looking in Vanguard some balanced (stocks + bonds) index fund / ETF that tracks the S&P 500 but the only thing I've found is: VFINX: https://investor.vanguard.com/mutual-funds/profile/VFINX ...
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2answers
70 views

“Holding the trade” in fixed income arbitrage

From TIPS v Treasuries: What a wild ride it was! Receiving 5% on one US Government Bond and paying 2.5% on another US Government Bond with the same maturity is an obvious winner, but many hedge ...
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1answer
71 views

Buying a bond before coupon?

This is probably going to sound like a dumb question but, say you have bonds with 10% coupon payments and face value we know is 1,000. If the bond is currently trading at 1,400 (a premium to the par ...
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1answer
66 views

Are Muni REVENUE bonds secured or can the local gov. use the revenues for other purposes not paying the bond holders if its going bankrupt?

Municipal bonds are of two kinds: GO (General Obligation) Bonds or Revenue Bonds. My question on Revenue Bonds is: are the revenues from the specific project secured or can the local government use ...
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1answer
51 views

How does this “cont callable,” “make whole calls” bond work?

I was looking at this bond on TD Ameritrade: This is a callable bond, so I'm wondering how that works, exactly. TD Ameritrade says that this bond is "cont callable," which I assume is an ...
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0answers
50 views

Can a capital loss on a gilt be set against the interest received when tax is calculated?

Say if I buy a 3.75% gilt for £103, with a redemption date 1 year from now, then at the the end of the year I should receive £3.75 interest from coupons, but I lose £3 of capital. The total gain is £0....
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3answers
209 views

How can you short a bond if you think it's going to default when it comes due?

For the first 29 years, a 30-year bond works more or less like any other security, and you can short it just like anything else. However, I'm interested in what happens if you want to short it at the ...
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3answers
672 views

Bond with 200% yield

I stumbled upon the following bond: ISIN: DE000A189FZ7 How can a serious company like BayerAG which is a german Dax corporation offer a bond with over 200% profit within 5 years. Where is the hidden ...
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68 views

Why would anyone buy a bond with a negative interest yield? [duplicate]

According to this article I read from MSN today, markets around the world are trading bonds at a negative interest yield. This to me seems completely insane - bonds standing over time should ...
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1answer
101 views

How do index funds with such different stock/bond distributions have such similar returns?

The Vanguard Target Retirement 2025 Fund (VTTVX) says it has approx. 65% of assets in stock and 35% in bonds and had a YTD return of 12.46% (As of 8/30/19) The Vanguard Target Retirement 2055 Fund (...
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4answers
180 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 ...
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2answers
123 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 ...
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1answer
53 views

Single period immunization, rebalancing

While reading about Bond portfolio management I came across maturity matching and single period immunization. Which If I understand correctly is if the holding period of a bond is its maturity then ...
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1answer
131 views

Is it good if a network marketing company is not asking for an investment? [closed]

And does network marketing include any interest or compound interest? A network marketing company is not ask for any investment, and they have halal certificate. I would like to ask if network ...
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2answers
124 views

Short-term Corporate Bond has Higher Yield than Long-term. Why is This?

I looked at the past yields of Sears Holdings (before chapter 11) and the Yield to Maturity (YTM) were all as I would expect. I look at current yields of JCP and they are pretty much as one would ...
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1answer
76 views

Moneyfarm (ETF) and Coupons

I am a beginner, I have possessed public debt bonds only, so far. Recently I decided to differentiate my savings on some form of ETF, specifically on Moneyfarm, just to give it a try. Now, I am trying ...
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1answer
76 views

Explaining prepayment risk

Regarding MBS I understand that as rates fall people with mortgages will want to refinance and thus mortgage prepayments will increase, causing the life of the MBS to decrease and for the investor to ...
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1answer
96 views

Bond analysis criterion as per Benjamin Graham

I'm currently reading Benjamin Graham's intelligent investor. This is the first book I'm reading about stock market investments. In chapter 11 under bond analysis section it says: The chief ...
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3answers
140 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 ...
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4answers
126 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 ...
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3answers
250 views

Why would one buy a bond with negative rate? [duplicate]

I see presently that many countries outside the U.S. have negative rate government bonds. So you buy one for $101 and in 5 years you get $100 back (face value). (I picked numbers for simplicity). I ...
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2answers
173 views

US treasuries yield on economy news

When looking at say Bloomberg or CNBC news on televison, one often sees different yields for US treasuries pop up. I.e What does this represent? I.e how are these numbers determined? It cant be ...
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2answers
285 views

what is the possibility of USA having negative interest rate [closed]

There has been attempt at reducing the interest rates. Apart from, elderly and savers depend on the bank interest and Stock market is driven by interest rates, the true cost of money if becomes ...
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2answers
96 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 ...
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3answers
188 views

Why does bond price go up with interest rate decrease?

I understand that a decrease in prevailing market interest rate causes a downward pressure on the bond yield and, equivalently, an upward pressure on the bond price. But what if a decrease in interest ...
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2answers
160 views

What happens exactly if a company defaults on its bond?

In finance textbooks, when a company defaults on its bond, the investor in the bond simply does not receive its money or recover only a certain percentage. But what happens in reality? Shouldn't the ...
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1answer
2k views

Yield on municipal bonds versus treasury

I'm looking right now at the yields in Municipal bonds and Treasury bonds on Bloomberg: https://www.bloomberg.com/markets/rates-bonds/government-bonds/us and I see that yields on Municipal bonds are ...
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1answer
189 views

Negative rates on government bonds

Take the german 10J-Bundesanleihe for example, as far as I know the rates for it went negative recently. Is there any incentive for private investors / or institutional ones to invest now into this ...
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1answer
91 views

Exchange-traded security that represents the value of a government bond?

Is there an exchange-traded security that represents the value of a government bond? Since the latter have a very large volume, I would be interested to see to what extent private investors can ...
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2answers
81 views

What happens when the bonds bought with QE default?

QE happens when central banks buy (crap) bonds from financial companies, giving them liquidity to buy better assets. Consequently boosting the stock market as we have seen. But what happens if these ...
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1answer
60 views

What is the effect of a Fed Reserve rate cut on corporate bond funds?

What is the likely effect of a Fed rate cut on corporate bond funds like VTC? I would think if the Fed rate goes down it would make the corporate bonds more valuable as their dividends become ...
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4answers
1k views

What is the purpose of bonds within an investment portfolio?

Are bonds part of an investment portfolio so that you can invest during a dip in the market? (I heard this from a robo-advisor as it allows you flexibility to invest during a downturn) Or do bonds ...
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1answer
98 views

What's to prevent majority shareholders in a company from dilluting a convertible note?

A company issues a convertible bond to an investor. It has a par value of $10,000 and can be converted into 5 shares. The company currently has 50 outstanding shares, so the bond corresponds to ~9% (...
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1answer
97 views

Why does the asset price of REITs go down when (US) bond rates go down?

REIT s often pay up to 10% dividends so I would think they should become more valuable when the US bond interest rates go down . For example : In the last 30 days CIM has gone from 19.1 to 18.5 while ...
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3answers
92 views

Variation in the price of bond

The price of a bond can vary because: the yield curve changes the flow of time (the time to maturity is reducing, for example compare a 1 year ZC bond with a 0.5 year ZC bond) How can I quantify the ...
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4answers
506 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 ...
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1answer
65 views

Bond income calculation question

I thought I got my Bond income right, but my brokerage company's calculator got me totally confused. So here is the problem: I bought a note (US treasury) yesterday: cusip: 912828TN0 (secondary market)...
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2answers
118 views

How to pick ETFs that hedge against stock market crashes?

If I want to hedge against a stock market crash the advice I often see is “diversify” and “buy bonds.” As a result, my portfolio is primarily Vanguard VTI and Vanguard BLV, the total stock market ...
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3answers
210 views

Bond fund vs High interest savings account

If you have some money - lets say 20k USD. Banks such as Ally provide 2.2% interest rate on Fixed deposits. Is investing in bond funds such as VBTLX safe and better than fixed deposit? Understand ...
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2answers
139 views

How can I practically buy bonds?

A moderately low risk of investment is a government bond. If I understand correctly, I spend €1000 on a 5-year bond at a yield of 1%, then in 5 years I get back 1000*(1.01)**5=€1051.01, unless the ...
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2answers
277 views

Is there a catch in investing in treasuries close to maturity date?

Is there a catch to invest to treasuries close to maturity date? I don't want to lock the money for a long time, b/c the interest rate probably will go up. But I am concern that it's not that simple. ...
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2answers
199 views

Bonds, interest rates and inflation

I was reading Learn to Earn by Peter Lynch and I came across a paragraph that has confused me to say the least. It is regarding bonds - If you buy a $10,000 ten-year bond and hold it for ten years,...
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1answer
118 views

U.S. 10 year treasury bonds behavior during crisis

It's often advised to buy and keep government bond to protect ourselves against the next upcoming crisis. (For example, in a defensive stock portfolio you can have 50% of stock and maybe 30% of ...
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33 views

Explanation of Macaulay duration for bonds?

I understand how to calculate duration but I'm a bit confused about what it actually tells me and how it is useful and I can't seem to find anything that tells me. If a bond has a maturity of 5 years ...
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1answer
63 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 ...
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2answers
217 views

What kind of bonds are ideal for short term investments

I have money in my bank right and I want to acces them in 1-2 years. I am not willing to take the risk in a stock portfolio, but willing to make bond investments riskier than buying government bonds. ...