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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.

9
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3answers
7k views

Can an American birth certificate be redeemed for money? [on hold]

Can an American birth certificate be redeemed for money? Why is it printed on bond paper?
3
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5answers
110 views

Calculating total return of a bond

I'm trying to understand bond yields, prices and coupons. I get the basic concepts (i.e. coupon is the interest paid in each period and prices and yields are the inverse of each other). I don't ...
0
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0answers
64 views

How do I solve this exercise with bond and probabilities?

I have a bond with coupon rate 10% and annual coupon payments with maturity 3 years, face value 1000 and yield to maturity 8%. The bond pays the first coupon with 20% probability and nothing with 80% ...
1
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1answer
43 views

Annuity vs Bond Returns

The way I understand it buying a simple term annuity from an insurance company is like depositing money in a account that earns fixed interest compounded for the duration of the annuity and taking out ...
0
votes
1answer
48 views

Extra large margin for government bonds

The value of my brokerage account is $1000x (Fidelity if it matters). Looking at my balances, I see that I am afforded an additional "government bond" buying power which is about $2250x. My regular ...
0
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0answers
20 views

convertible bond

ABC Limited has in issue 14.5% convertible bond currently quoted on the NYSE at $108 per $100 nominal immediately after payment of the annual interest. The bond will be convertible into ordinary ...
0
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1answer
40 views

Interest rate risk of bond that is held to maturity

While reading online about interest rate risk associated with bonds it stated that if an investor plans to hold a bond until its maturity then interest rate risk is insignificant since the final ...
1
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1answer
35 views

Calculating Bond returns as an annual compounded rate

I've been reading up on bonds and the different methods there are of calculating the yield of the bond. So suppose I bought a $1000 face value with a 5% coupon that pays semi annually for $995 with a ...
2
votes
3answers
76 views

Bonds Yields and Coupon Rate

I read about bonds. Let's say the face value is 1000 rupees and the coupon is 10%. The coupon will be 100 which will be issued at the end of the year if the maturity is one year. Is that correct? ...
1
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1answer
84 views

Portfolio questions

I am constructing a portfolio and considering a number of different security classes: Stocks, commodities, ETFs, currencies and bonds. In order to decide which securities to include in my Portfolio ...
0
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1answer
30 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 ...
40
votes
10answers
17k views

Why would anyone buy U.S. Treasury Bills?

From the Treasury Direct website, I saw this Bills: U.S. Treasury Bills are a type of short-term security of one year or less, usually issued at a discount. The discount is the amount the security ...
0
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1answer
38 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 ...
2
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2answers
251 views

Why would I buy bonds? [duplicate]

Say I want to buy a bond that matures in 10 years, and that pays out 5% of once a year, so it has 10 payouts remaining. Say the value is 100$. Say the bond is being sold for 140$ today. I would be ...
0
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1answer
43 views

CAT & ILS Bonds/funds [closed]

I'm constructing an portfolio with the objective to diversify as much as possible. I would like to include securities that are uncorrelated with the financial markets. The last few days I've been ...
7
votes
4answers
1k views

Are bonds worth the investment since they don't compound?

I was talking with my parents and they told me they have been buying 30 year EE bonds at $100 every 2 months with an interest rate of 4%. Because it is an EE bond, it does not pay a monthly coupon. So ...
2
votes
1answer
52 views

Treasury Expected Yield vs. Reality Difference

I looked at the US treasury website https://www.treasurydirect.gov/instit/annceresult/annceresult.htm and the usual percentage of interest one should get is around 2.4%. So, if I bought a 4-week ...
-3
votes
1answer
76 views

Mathematic of bond pricing [closed]

Getting lost on an exercise hope you can help, thanks. A 1000 par value bond purchased two years ago at 890 now trades at 925. Coupons of 100 received at the end of each of the two preceding two ...
0
votes
1answer
43 views

Bond prices - present value

I'm reading a text of Macroeconomics - Financial Markets as a chapter. It has a line which states: "Suppose you hold two-year bonds. Because the price of a two year bond is $P, every dollar you put ...
1
vote
1answer
61 views

basic questions about US bond trading

I'm new to the bond trading, but have some basic questions. Let's suppose I want to buy the following bond today (11/6/2018) See this As you can see there, the maturity date of that bond is 11/30/...
1
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1answer
45 views

Characterising risks of an corporate/goverment bond ETF's

I have been looking at different conservative investment strategies such as 50/50 "interest fund", "global stock fund" and "the permanent portfolio". As an alternative, I was looking for corporate ...
8
votes
3answers
293 views

Is there anything wrong with having a portfolio consisting of a single fund?

Aside from cash reserves, the entire portfolio is in a Vanguard mutual fund that has a good split between domestic stocks and bonds. The split is at the target ratio the investor is looking for. Is ...
0
votes
1answer
108 views

What is the difference between SWK, SWJ, and SWP (Stanley Black & Decker)

Stanley Black & Decker seems to have three symbols on the NYSE. SWK: Stanley Black & Decker, Inc. SWP: Stanley Black & Decker, Inc. CORP UNIT 2017 SWJ: Stanley Black & Decker, Inc. JR ...
1
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2answers
73 views

Can you put an I-bond in a roth IRA?

I was wondering if I could do this, it just seems to make so much sense. You will be earning interest on your I-bond and you won't have to pay taxes until you take out your money during retirement. ...
1
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0answers
25 views

How does a typical bond ETF provide tax information to the investor in Canada?

Before deciding whether to use registered or unregistered (taxable in Canada) account, I'd like to understand the complexity of tax reporting as a result of holding bond ETF, for example BMO ZFL (long ...
2
votes
2answers
62 views

Simpler way of calculating duration for bonds?

So the question is: Find the duration of a 6% coupon bond making annual coupon payments if it has 3 years until maturity and has a yield to maturity of 6%. What is the duration if the yield to ...
1
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3answers
84 views

Understanding bond ETFs

I am failing to understand the bond ETFs. I somewhat understand stock ETFs: ETFs own stocks, I buy a part of ETF, therefore, I also indirectly own stocks. When I sell my share of ETF, the ETF gets ...
0
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1answer
55 views

Extension risk with IO bonds

I'm trying to understand the extension risk associated with interest only bonds in a CMO. When rates rise, prepayments drop, and so the life of the IO bonds is extended. This causes the value of the ...
2
votes
2answers
198 views

Am I confused about how to diversify into bonds?

I held several Vanguard equity ETFs (VFIAX, etc.) I wanted to diversify into bonds (as discussed in "A Random Walk Down Wall Street"), so I sold some of them and bought BLV. As stocks have declined, ...
1
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3answers
73 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?
0
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1answer
124 views

Bond sell off vs stocks

U.S. stocks fell following a bond selloff that sent yields to multi-year highs. New filings for unemployment fell unexpectedly to near 49-year lows. The benchmark 10-year U.S. Treasury yield rose ...
-2
votes
2answers
177 views

Can a chair(wo)man personally buy up the majority of its company's bond?

Can a chair(wo)man of a public company personally buy up the majority of a bond offered by that same company? Scenario: Public company issues corporate bond. Chair(wo)man of same company buys ...
6
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2answers
290 views

Is Mexico on the verge of defaulting on parts it’s national debt before Andrés López Obrador take office?

All bonds issued by Mexico with maturity scheduled for 2018 are traded at a huge discount of their face value. I mean whatever currency or stock exchange used here’s an example : For reference, they ...
1
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0answers
62 views

confusing returns from bonds

New to bond investment and seek clarification - On Charles Schwab Bond Source chart for fixed income offerings, the followings are listed CD 1yr: 2.6 Muni (AAA) 1yr: 2.71 I assume it meant ...
3
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2answers
82 views

Can you use fed interest rates to predict the share price of a bond ETF?

The Fed interest rate is inversely proportional to a bond's value: When the Fed increases interest rates, your bonds lose value. When the Fed decreases interest rates, your bonds gain value. Since ...
0
votes
1answer
36 views

MBS vs Corp or Muni bond. Please explain the difference

How are MBS different from corporate or municipal bonds that have a coupon attached? For example, if I invest 25,000 per year, how do I get the return? Is there a fixed coupon? Also, I heard of ...
0
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1answer
27 views

Optimal interest rate environment for mortgage-backed securities?

When rates rise MBS investors face extension risk and when rates are dropping investors face prepayment risk. If this is true then when is the optimal time to invest in MBS?
3
votes
3answers
104 views

Does a bond mutual fund qualify as “bonds” for the purposes of risk management?

I am re-balancing my portfolio to be a little more conservative. I am considering taking some of what's currently in equity ETFs and putting them into VBMFX, a "Total Bond Market Index Fund". Is ...
2
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2answers
111 views

Question about the Federal Funds Rate

As I understand it, the Fed will set a target for what it wants the Federal Funds Rate to be and then try to achieve this goal through its open market operations. Is the amount of volume that the Fed ...
0
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2answers
41 views

Bonds and CUSIPs

Does the CUSIP on a bond change every change? A relative of mine, who lives in the US, has a trade confirmation showing that she bought a municipal bond. The bond was called recently and that trade ...
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2answers
97 views

Are there any advantages of long term US treasury ETF's / funds?

I'm debating whether to include any long term US treasury bond ETF in my portfolio. Are there any reasons I would include it rather than go for other types such as intermediate term bond ETFs and US ...
1
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1answer
55 views

Another word for this kind of 'Corporate Bond'?

I'm currently working at a company that was acquired in the not too distant past. The company is still relatively small and still has a "start-up" mentality in a lot of ways, for better or for worse. ...
2
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0answers
46 views

Series EE Bonds [closed]

My mother has passed and I found 70,000 in Series EE Bonds. She was in a nursing home which she paid for until she ran out of money and then the state took over the bill. Can I cash the bonds or will ...
57
votes
10answers
13k views

Why don't bond makers just get loans?

I was just looking at investment opportunities, and I found a number of places offering bonds paying up to 12% interest over two years. My first thought was, I can get a loan from my bank for 5% ...
0
votes
1answer
61 views

Treasury bond yield

I am trying to learn about valuation and yields for treasury bonds. For the Treasury Bond maturing on 11/15/2018, initially sold in 1988 with a 9% coupon, it states that the yield to maturity is 1.66%....
1
vote
1answer
104 views

Bond Issuance Question

During a new bond issue how do the bankers/advisors determine an initial price for the bond? I know that during an IPO the investment bankers will guage demand for the issue, and price the issue ...
0
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2answers
64 views

how to estimate bond ETF price once interest rate changes?

I'm looking at an example bond ETF which track bonds that expire on 2027 which means its for almost 10 years to its intermediate-term bond tracking. I understand that if interest rate would go up, ...
0
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2answers
143 views

Do Junk Bonds have higher coupon rates then investment grade/treasury bonds

I'm trying to understand how junk bonds would incite investors to purchase them, did they offer higher coupon rates then the prevailing market or were they simple priced cheaply in order to ensure a ...
2
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1answer
81 views

Comparing bank to bond ETF

Let's say I have a bank savings account giving this interest: Rate: 1.736% APY: 1.75% (rate accounting for compounding interest) And there's a bond ETF SCHZ with these rates: TTM: Distribution ...
2
votes
1answer
84 views

Are High Yield Bonds issued at a premium or discount?

Will the demand for a higher yielding security cause the high yield bond to be issued at a premium, or will the risk of default and other risks cause the bonds to be issued at a discount to face value?...