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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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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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0answers
62 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% ...
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1answer
39 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
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1answer
41 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 ...
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0answers
19 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 ...
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1answer
37 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 ...
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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
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3answers
75 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? ...
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1answer
58 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 ...
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1answer
37 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 ...
0
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1answer
24 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 ...
2
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2answers
245 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
36 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 ...
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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 ...
6
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2answers
6k views

Italy BTP vs. German Bund spread. Care to explain?

I hear a lot of chatting about BTP/Bund spread recently. I am not familiar with this concept. Could you explain what it is and what it means, in layman's terms?
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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 ...
0
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1answer
86 views

How should I interpret information about bond spreads that narrowed or widened the most?

How should I interpret information about bond spreads that narrowed or widened the most? I see this information in the financial pages in the newspaper, and have some ideas about what it means, but ...
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1answer
103 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 ...
2
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1answer
50 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 ...
1
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1answer
174 views

Correct interpretation of side-by-side graphs of intra-day fluctuations of stocks and bonds

At the end of the day on Tuesday, February 6, 2018, a snapshot of the Dow and 10 year Treasuries was as below: At the dip of the stock market on Tuesday, there was also a dip in the yield of the 10-...
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2answers
287 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 ...
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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 ...
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2answers
68 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. ...
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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/...
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1answer
42 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
291 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 ...
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2answers
256 views

Bond prices: Why is a high yield sometimes too good to be true?

Thank you for taking the time to explain me this. I'm looking at bonds prices at Yahoo Finance (see attached image) And it seems to good to be true: A-rated bonds at YTM rates of 11% and more. What ...
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1answer
269 views

Can I sell section 54EC infra bonds before maturity?

This question pertains to section 54EC infrastructure bonds that are offered in India — the ones with tax-free dividends (though the principal is taxed). I have invested some money in NHAI and IRFC ...
0
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1answer
87 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 ...
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?
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2answers
61 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 ...
0
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3answers
133 views

collateralized mortgage obligations

I was reading a comparative description in between CDO's and CMO's on Investopedia.com and I cant seem to understand the following statement: When the mortgages underlying a CMO are of poor credit ...
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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 ...
0
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1answer
73 views

Easy ways to hedge against debt overleverage and potential inflation as a personal economic agent

Every prediction is correct... at some point in the future. However, there are economical indicators that would be considered teaching points if a financial crisis were to occur at any point in the ...
0
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1answer
52 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 ...
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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 ...
2
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2answers
196 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, ...
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3answers
71 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?
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1answer
123 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 ...
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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 ...
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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 ...
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0answers
61 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 ...
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3answers
101 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 ...
0
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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 ...
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2answers
108 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 ...
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2answers
40 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 ...
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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. ...
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3answers
60 views

Which type of yield do finance professionals refer to when talking about “bond yields”

I am aware that there are many different ways to measure a bonds yield including YTM and the Current Yield. However I am not quite sure which yield is being referred to in a yield curve and other ...
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1answer
141 views

Why would a CD Rate be higher than a Corporate Bond rate?

In looking at my brokerage account for fixed income products, I was looking at both CDs and Corporate Bonds. I was surprised to see that the best 1-year CDs had a higher interest rate than any AAA or ...