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
91 views

Can US private companies issue publicly-traded bonds?

In the United States, can private companies issue publicly-traded bonds? If so, are these bonds usually available to retail investors, or are they restricted to accredited investors? Where do these ...
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1answer
20 views

How does Bloomberg Barclays US Aggregate Bond compare to ICE US Treasury Core Bond?

I'm looking at two US aggregate bonds trying to understand why one is more popular than the other. iShares US Aggregate Bond UCITS ETF - 0.25% TER - Bloomberg Barclays iShares US Treasury Bond UCITS ...
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46 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 ...
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86 views

Why should I buy bonds for my long-term portfolio when bonds have a lower upside than stocks? [duplicate]

I am one of those people who have 100% of their long-term portfolio in stocks (both in individual stocks and diversified index funds). I have an investment horizon of 50 years, so by "long-term&...
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3answers
139 views

Why are bond interest rates set at the interest rate set by the Fed?

I have a question about bonds: why do corporations, municipalities, and the treasury set bond interest rates at the current U.S Federal Reserve interest rate? Also, how does the Fed set interest rates?...
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1answer
26 views

What does it mean for income bonds to have deductibility of interest paid from the company's taxable income?

What does it mean for income bonds to have deductibility of interest paid from the company's taxable income? And why does this deductibility cut the cost of that form of capital in half?
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1answer
46 views

An investor holding an 8% subordinated debenture will receive how much at maturity

I came across this question in the Wiley Series 7 2020 book. The answer is c. at maturity receive principal payment plus last semi interest payment, but I still do not get it. Can you explain? An ...
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1answer
98 views

Can companies deliberately cause their bonds to be downgraded to junk status in order to reduce repayment?

Suppose a company decides to issue bonds at $1000 par value with $50 annual coupon (5% yield). Suppose these bonds were considered "investment grade" when issued. Suppose the company ...
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1answer
50 views

How do I find the list of bonds issued by a company? [closed]

I know where to find quotes and basic financial information for stocks. For example, if I am interested in PepsiCo stock (NASDAQ: PEP), I will simply search for "PepsiCo" on Yahoo Finance. ...
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2answers
199 views

Why are people willing to buy corporate bonds with a negative yield instead of government bonds that have positive yield?

I was looking at The Coca-Cola Company's 1.550% September 2021 bonds (CUSIP: 191216BY5). Last trades reported to FINRA (using TRACE): To my surprise, someone was willing to get a negative yield to ...
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1answer
38 views

Bond price in crises

How do bond prices fall in a crisis as of course credit spreads will go up generally but also interest rates plummet meaning surely the bond price rises at the same time? Does this effect cancel out ...
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1answer
25 views

Why would an issuer redeem a callable bond in the event of low interest rates?

I have a question about callable bonds. I have read that when interest rates decrease, companies that issue these types of bonds will redeem them. But why would the issuer do that? Shouldn't they wait ...
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37 views

How can I gain exposure to long term treasuries across the entire globe?

A "Long-Term Treasury" fund typically holds US government debt with a long expiration date, for example, 20 to 30 years in the future. It is frequently cited as a useful portfolio component ...
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1answer
73 views

How/when to shift from stock to bonds

I recently got a stable job and started investing. Since I am in Europe and the majority of decent blogs are US-targeted I've made many mistakes along the way but I think I have stock or stock-ETF ...
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1answer
40 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,...
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1answer
93 views

Can companies distribute all remaning cash to shareholders right before filing for bankruptcy?

Suppose a company is insolvent with negative shareholder's equity, $10 million in debt, and has only $1 million in cash. Can the company declare dividends of $1 million to shareholders prior to filing ...
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11 views

Where can I find quotes for over-the-counter bonds traded in Singapore?

In the US, over-the-counter secondary market bond trades are reported in the Trade Reporting and Compliance Engine (TRACE). Is there a similar system in Singapore where I can view historical trades of ...
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1answer
58 views

How are bonds priced when first sold in the primary market?

Suppose company A wants to raise $50 million dollars using bonds. It decides to issue 50,000 bonds, where each bond is given a yearly coupon of $60. How will these bonds be priced when they are first ...
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111 views

Trying to understand bond prices

I'm trying to learn about bonds, but when I looked at some real-world charts, they don't seem to make much sense to me... For example, these two bonds: Same company, same rates, same maturity dates, ...
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1answer
67 views

Where can I see at what price a company's debt is trading at?

I was reading Barron's today and came across the below quote - Hertz’s debt somewhere in the range of 30-40 cents on the dollar. If the stock actually were worth something, the debt ought to ...
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2answers
65 views

Why did bond prices temporarily dip in March 2020?

I was looking at the historical prices of iShares Core U.S. Aggregate Bond ETF (AGG), and Vanguard Short-Term Inflation-Protected Securities ETF (VTIP): What explains the sudden dip in bond prices (...
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1answer
67 views

Why is data not available for US treasury bonds on Interactive Brokers website?

I wanted to buy my first bond ever today, but when trying to get the prices for "US Treasuries" in the bond scanner page on Interactive Brokers, I was greeted with the following message: Is this ...
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0answers
33 views

Why does an inverted yield curve point to an economic recession? [duplicate]

From Investopedia: The three key types of yield curves include normal, inverted and flat. Upward sloping (also known as normal yield curves) is where longer-term bonds have higher yields than short-...
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2answers
120 views

What determined the “cost of borrowing money” or the interest rate in a gold-based economy [closed]

In the modern economy, the central bank decides the cost of borrowing money using interest rates along with other several tools and technic. But I was wondering, in a gold-based economy (not the gold ...
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4answers
125 views

Does defaulting on a coupon payment make a bond worthless?

How does it work when the issuer of a bond defaults on a coupon payment? Does the value of the bond instantly fall to $0, or are allowances made in the hope that future coupon payments might be made? ...
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2answers
59 views

How do I find the present value of a bond by discounting each cash flow at a different rate?

Suppose I have a $100 par value bond that pays $6 in coupons semi-anually (i.e. $3 every 6 months). The bond matures in 2 years. There will be a total of 4 cash flows, so the present value calculation ...
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1answer
118 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 ...
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1answer
70 views

Trying to understand the behavior of the bond market during the COVID19 crisis [closed]

I'm aware of several corporate bond indices that are (slightly) going up despite of the COVID19 crisis. For instance, let's take this corporate bond index as an example. Choosing the 1Y chart one can ...
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35 views

Is this definition of duration incorrect on Investopedia?

"Duration is the weighted average of the present value of coupon payments and principal repayment." (see 1st sentence of 4th paragraph of text) https://www.investopedia.com/terms/c/convexity-...
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92 views

What would happen to a typical investment portfolio if the dollar collapses?

Let's say I have an investment portfolio with diversified US stocks and diversified US bonds. How would a dollar collapse affect this portfolio? And which component of the portfolio is less likely ...
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2answers
43 views

What happens to a target-maturity corporate bond ETF if one of the companies collapses?

Consider a target-maturity corporate bond ETF such as the iShares iBonds Dec 2020 Term Corporate ETF (NYSE Arca: IBDL). The yield-to-maturity of the ETF is approximately 1%. The fund holds 250+ bonds ...
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25 views

Why is my series EE bond's next accrual date not a multiple of 6 months after the issue date

My grandparents gave me a few Series EE bonds while I was growing up. I have entered their serial numbers/issue dates into this calculator on treasurydirect.gov. Most of the bonds' issue date was in ...
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Are the corporate bonds' interest rates set by central banks?

In countries which use a central bank system: When people speak about the 'interest rates', they mean interest to which the central bank (whatever it is) lends money to other banks, which in turn ...
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1k views

Income vs growth securities in a downturn

It's generally accepted that "income (dividends) and growth (capital gains) are perfect substitutes (tax and transaction costs aside)". i.e. "In financial theory, there is no reason for a difference ...
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45 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 ...
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1answer
52 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 ...
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1answer
30 views

1099-OID: Where to enter in taxes?

I received a 1099-OID form from my broker for the first time and don’t know where to enter the data in my taxes. The form has a value of 1.89 in box 1, and nothing else. This data is for a total of ...
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38 views

Exercise on how to value a bond

I'm a computer science student and in the current semester I wanted to participate at a "Project and Enterprise" financing course. The problem is that due to corona, normal lectures are not possible ...
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2answers
132 views

Why should I buy a principal protected note from the bank when I can create one on my own?

I was looking at principal protected notes (PPN) at a bank (link: CIBC Principal Protected Notes). It says: The return of your CIBC PPN depends on the performance of the underlying assets. (It ...
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1answer
63 views

What is the difference between commercial papers and corporate bonds?

From Investopedia: An example of commercial paper is when a retail firm is looking for short-term funding to finance some new inventory for an upcoming holiday season. The firm needs $10 million ...
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2answers
68 views

Making money on a Bond Rally

I mainly trade equities and derivatives, however, I'm listening to more and more intelligent economists and fund managers who are talking about how low rates and treasuries will be leading to a major ...
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1answer
70 views

Is there anyway to workout this IRR with pen and paper or do I need a computer?

For the following question (part a), do I need a computer to calculate this IRR or can it be done via pen and paper? I have found the sale price at Y10 to be $78.81 and looking at the IRR as the ...
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2k views

Do bonds become more valuable right before a coupon payment?

I'm learning about fixed income for the first time and my understanding is that the value of a bond depends on three major variables: The face value The time to maturity The coupon rate a.k.a. the ...
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91 views

Series EE bond $50.00 - what is it worth now? U.S. saving bond

What would a $50.00 Series EE bond be worth now if I purchased it in December 1996?
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68 views

Will the Feds pumping 500 billions affect Treasury Bond ETFs?

I was wondering about the question above. I was told that the feds pump the market by buying stocks and bonds which theoretically means that they're going to be investing in bond ETFs. Is my theory ...
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1answer
151 views

What does TMUBMUSD10Y stand for? (U.S. 10 Year Treasury Note)

MarketWatch, WSJ, and Barrons all list the U.S. 10 Year Treasury Note using the symbol TMUBMUSD10Y. What type of ticker/symbol is this? What does TMUBMUSD10Y stand for?
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81 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 ...
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2answers
80 views

Question concerning Investment Grade Bonds

I wish to stick some reserve money in some bonds until current market conditions show signs of improvement. My question is, Bonds like Vanguard VCIT or EDV (examples only), I’m a bit confused with ...
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1answer
62 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 ...
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1answer
143 views

Variable Rate Bonds and NQSI

I was looking at a friend's 1099 and I saw the term NSQI. It was for a variable interest rate bond. Am I correct that means non-qualified stated interest? The 1099 showed both the interest the bond ...

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