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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 do CDO's have a reinvestment period?

If CDO's collect all the cashflows from their underlying assets and then pay them out to the CDO investors whats the need for a reinvestment period? and where is the principal that is being reinvested ...
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0answers
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Buy shares and bonds in non citizens countries

I am from Sri Lanka and I invested in stock market and bond in Sri Lanka. But I really like to buy other countries shares and bonds. Is it possible to buy those thing without citizenship. I know ...
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2answers
212 views

Criteria for selecting Bond ETFs

My investments are split between 4 ETFs (US, International, REIT, and bonds). Until recently, bonds were a relatively small part of the portfolio so I didn't put much thought into it and selected a ...
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1answer
49 views

Meaning of 10-year treasury note price change

At this moment, WSJ quotes 10-year T-note as below: Price: $100 3/32 Price change: -2/32 (-0.08%) Question 1: Where does the -0.08% change come from? To me, it seems the old price is 100 5/32. ...
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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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2answers
187 views

What do people mean when they say US 10 year Government Bond?

I am very new to investing and I am particularly interested in fixed income product. I am just wondering what do people mean when they say US 10 year Government Bond? This term confuses me as I can ...
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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
70 views

Bond Yield Calculation

A $1000 face value coupon bond has a 10% coupon rate, a maturity of 4 years, and a price of $950. Calculate the present value of the bond when the interest rate is 12%. Must the yield to ...
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5answers
6k views

Why invest in long term government bonds when the yield curve is inverting?

The New York Times has noted that the US is heading toward an inverted yield curve, which is one of the precursors for a recession. The yield curve is said to be inverted when long term government ...
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1answer
106 views

Bond ETF's: why isn't the nominal value of the underlying asset mentioned anywhere?

I am wondering why you never see the (weighted) nominal value of the underlying assets of a bond ETF mentioned anywhere. It seems to me this information is needed to determine whether a bond ETF is ...
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1answer
101 views

UK bond yield below inflation rate means negative ROI likely if held until maturity?

Current UK bonds have nominal interest rates well below the current inflation rate, even the long-term ones. If we assume that, on average, the inflation rate remains the same or rises, and the bonds ...
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3answers
108 views

Difference between bond fund and bond index fund

What is the difference between a bond fund and a bond index fund? For example, FIJEX is labeled as a normal bond fund with a gross expense ratio of 0.51% and SWSBX is a bond index fund with a much ...
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What does one typically use as a money reservoir for stocks, when they are “on sale”?

I've read about people who claim to have made a lot of money investing in stocks (or funds) after a crash. They say the stocks were "on sale". But I wonder, where did they get the money to buy these ...
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2answers
383 views

Does MTM of a Bond include its accrued interest?

I understand that the MTM of a bond refers to Mark to Market value. I am trying to understand whether such price also includes accrued interest if any. I tried searching a lot in google, but couldn't ...
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4answers
193 views

Bonds: Why repay the principal at the maturity date all at once?

Bank loans have options to repay the principal and interest over the time. Correct me if I'm wrong, but AFAIK, bonds don't have these options but to repay the principal all at once. And this ...
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2answers
178 views

Bond yields vs interest

At least from the US Treasury, why is there a yield AND interest rate when auctioning notes? https://treasurydirect.gov/indiv/research/indepth/tnotes/res_tnote_rates.htm I'm under the impression ...
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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 ...
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2answers
115 views

Stocks vs Bonds

There is a lot of knowledge (mostly outdated?) that we (individual investors) should rebalance portion of money they allocate in stocks vs bonds. In the past decade, investing in bonds would have ...
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1answer
63 views

how to calculate holding period returns of a bond if they coupon is reinvested?

I was reading a book about debt securities and bonds. There is a way given in the book that calculates HPR of the bond. If an investor purchases a bond at Rs. 104, earns Rs. 8 as coupon, which ...
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1answer
61 views

In what circumstance would a company want to establish an SPE to engage in following investment?

I was reading a book explaining Special Purpose Entities (SPEs) and an example is used in the book: a firm could sell loans it has made to customers to an SPE that issues bonds to purchase the ...
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2answers
117 views

What does a long term bull market in bonds mean?

I recently read this in an article about the current state of the bond market: Coming off a 40-year bull market in bonds, the potential for capital losses on bond investments is very real, and ...
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1answer
84 views

How US government bonds with different face interest rates would be taxed?

The 5 year interest rates in the last 2 years have gone up from 1% to 2.8%. So, in secondary market there are US government bonds with 1.5% and 2.75% face coupons. What I am trying to understand is - ...
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111 views

If bond yields fall by 1% across all maturities, which of the following bonds will increase in value the most?

10% coupon bond with 15 years to maturity 5% coupon bond with 15 years to maturity 10% coupon bond with 20 years to maturity 5% coupon bond with 20 years to maturity
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2answers
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Can you calculate 10-year Treasury Note yield from price or vice versa?

I grabbed this screenshot from CNBC this morning: Are the price ($98.0469) and yield (2.981%) mathematically related? Investopedia says "A 10-year Treasury note pays interest at a fixed rate once ...
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1answer
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Asset Allocation, Risk Free Part with Negative Yielding Bonds

I read a few books about asset allocation, e.g. Bernsteins's Asset Allocation states that mixing bonds with stocks lowers the risk significantly but only decreases the profit slightly. So there is a ...
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2answers
58 views

How do I figure out the interest I will recive on a Secondary CD\Bond offering

I'm looking at the following secondary CD on Fidelity and I'm trying to figure out how much interest I will receive when it matures. Price (Ask) 100.157 Ask Yield to Maturity 1.557% Current ...
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3answers
371 views

Should I invest everything in bonds?

I will be finished with my master's degree in 4 years and I have 75K to invest. I want as much security as possible, at least till I have the degree. Then I would use the money and take an investment ...
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1answer
67 views

Is it time to invest in Bonds given the increase in interest rates? [closed]

Given the ongoing increase in interest rates, the value of bonds will come down. SO, is it time now to invest in bonds?
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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 ...
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1answer
243 views

Warren Buffett and how he earned his money [closed]

I have been quite fascinated by Warren Buffett, honestly over the last month he has been at the forefront of my mind, daily. I would like to invest money so that at some point I can profit from the ...
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1answer
114 views

Why invest in bond ETF if its trading value decreases?

Looking at bonds ETF like ZCS. It generates ~3% interest yearly. However when looking at ZCS trading value, it decreased about 3% this year. Question: If I had bought shares of ZCS a year ago and ...
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16answers
19k views

Why would I ever put my money into a savings account that returns less than the current inflation rate?

I like a safe investment as much as the next guy. But can anyone give me a good argument on why I should invest in a bond or a savings account that returns less than inflation? It seems to me that I ...
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2answers
258 views

Why are some medium term UK government bond (gilt) prices seemingly so disparate?

Looking at UK government bond prices and picking out one example of what I mean: Coupon Maturity Trading price Treasury 8% 2021 8 07-Jun-21 123.08 Treasury 4,3/4% ...
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1answer
62 views

How bidders determine price for T-bills?

Let's take for example 4 week T-bill issued today, 3/1/2018 (https://www.treasurydirect.gov/instit/annceresult/press/preanre/2018/R_20180227_1.pdf). Price of t-bill is determined on auction by ...
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1answer
61 views

Is the average default rate of a bond class annual or life of the bond?

In some web sites I see listed various "default rates" for different types of bonds, AAA, AA+, etc. Are those default rates per year, or over the life of the bond?
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How do I find out what bonds are for sale and their terms? (without a brokerage account)

I have no brokerage account. Is there some way to look up publicly what bonds are for sale and the terms of the bond? I know that bonds are often identified by their "CUSIP" number. What is that?
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1answer
105 views

Are state bonds considered “municipal” bonds?

I notice that in the United States, there seem to be three main kinds of bonds: "government bonds", meaning those issued by the United States Treasury, "municipal bonds" issued by municipalities, like ...
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1answer
1k views

Capital gains tax on US treasury bonds

If one buys 30 year bonds directly from the treasury, I understand the semi-annual interests are taxable at federal level. But what about capital gains in case the bonds are purchased at a discount ...
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2answers
300 views

Why is a 60/40 bond/equity mix not doing well?

The Vanguard Wellesley Income Fund (VWINX) is known as a highly conservative mutual fund composed of approximately 60% bonds and 40% equities. In the current markets, this seems like a good ...
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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
130 views

How to mitigate 401k risk with bonds?

I’ve read that for 401k’s, you want to reduce risk as you get older and the primary means to do that is to move money out of stocks and into bonds. Assuming that principle is generally valid, then ...
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3answers
145 views

Which asset classes have a “built-in” long-term growth logic?

My understanding is that stock markets are expected to generate returns above inflation in the long run because companies are paying out dividends and because investors demand compensation for ...
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1answer
85 views

10-year bond yields' effects on the stock market

In layman's terms, why does the market struggle when 10-year bond yields rise? The DOW dropped 177 points today and this was apparently the key reason.
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1answer
176 views

Where to move money in 401k to reduce risk?

I have a 401k where about 75% consists of stock based mutual funds. I want to use the remaining 25% to help protect what I've earned, especially in case the stock market goes down significantly. To do ...
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3answers
361 views

Is it a bad idea to frequently change my stock/bond mix in response to the market?

I'm currently investing in a couple of Betterment retirement accounts, and if you have used Betterment, you know that the site makes it easy to adjust your portfolio mix of stocks and bonds (see ...
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1answer
195 views

How to cash US savings bonds as a successor trustee?

I have paper series-I bonds that are made out as follows, actual names omitted: "husband" and "wife" CO-TR UDT DTDT "date and name of trust" If both the husband and wife have passed away, what is ...
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1answer
48 views

Share price determination

Am new to trading, and just wanted to ask. Am I right in saying that if you have fewer sellers than buyers, or if no one wanted to sell their shares that then the price of said shares would rise? And ...
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2answers
163 views

Does a stock/bond that stays at level price lose money over time?

I have the concrete problem of choosing which of a bond and a stock I should sell. Below, the price of the stock is shown in red, while the bond is black. The rest are various indices in Scandinavia (...
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2answers
254 views

Are mutual funds composed of bonds really as low-risk as the bonds themselves?

I live in the US. I often see advice that a retirement savings account should include a combination of stock mutual funds and bond mutual funds, with the relative weights depending on the years to ...
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1answer
55 views

How to calculate internal rate of return [beginner]

I am an informatics student who was given an assignment to do with finance and we're not very financially literate. We are asked to theoretically build a platform to mimic bond exchanges. As part of ...