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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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15 views

Clarification on definition of Negative Term Spread

I've been trying to educate myself on some financial terms and I've gotten into a point where I'm a little confused. Reading Understanding Term Spreads or Interest Rate Spreads I guess to understand ...
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1answer
47 views

Clarification about the definition of 'defensive portfolio' in the book 'The Intelligent Investor'

The book 'The Intelligent Investor' defines 'defensive portfolio' as one that holds, at least, 50% of bonds and 50% of stocks, being it more defensive as the proportion of bonds increases. However, (...
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2answers
28 views

How well do Treasury bond Futures correlate to their hypothetical underlying bond?

How well do Treasury bond Futures correlate to their hypothetical underlying bond? If the price of the future is most tightly related to the current CTD, whose maturity varies widely, how can the ...
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2answers
175 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 ...
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2answers
63 views

Bonds - Yield to maturity

In bonds, we assume that coupons are reinvested at the same rate as the current yield rate. Where do we go and invest the coupons? Assuming the YTM is 10%, the coupon rate is 10% and the per value ...
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2answers
92 views

Does the stock market provide better long term returns than bonds outside the US?

There is an old saying that stock market provides better long term returns than bonds. The example usually cited is always the US stock market which has had a good bull run and has it doubled in ...
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0answers
30 views

Master thesis : Comparison of green bonds certifications

I am currently thinking about the master thesis I'll need to write in order to obtain my degree. One interesting subject could be the certification of green bonds. Indeed, In order to guarantee ...
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4answers
428 views

Why do rich people prefer shares with dividend over bonds?

I am especially (but not only referring to Warren Buffen, Bill Gates and so on). The first thing that came to my mind is because they can use their voting power, but then Warren started with shares (...
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1answer
111 views

Why have treasury prices risen despite increasing interest rates since the Great Recession?

ETFs that track treasuries have risen despite the fact that the global economy has stabilized since 2008 and interest rates have risen (from near 0 to ~1.5%) My (very simplistic) understanding of ...
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1answer
67 views

What does it mean when central banks buy bonds (QE)? [closed]

If I lend money to the government, they issue me a bond with the agreement that they will pay me interest and when the bond matures they will give me back the money I have invested. When central ...
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1answer
63 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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2answers
76 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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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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1answer
46 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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2answers
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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1answer
148 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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2answers
72 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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1answer
1k views

Do US Series I Savings Bonds have CUSIPs?

Do Series I Savings Bonds ("I-bonds") have CUSIPs? If so, how can I find the CUSIP for my electronically-purchased I-bonds? The TreasuryDirect website has information about some recent auctions with ...
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2answers
179 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
71 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 ...
4
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1answer
73 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
69 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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2answers
278 views

Investors may never recover … losses from bond funds?

Source: In a rising interest rate world, ... own bonds or bond funds?, by Gail Bebee, 2013 Jul 2 Managing a bond portfolio takes work and is not feasible for smaller accounts. Consequently, many ...
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1answer
74 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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3answers
679 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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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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1answer
54 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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0answers
69 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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2answers
288 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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4answers
784 views

Why would I buy a bond with a negative yield?

The only reason that I can think of is because I expect the bond to appreciate in price thus offsetting the loss in yield. I could still end up with less money than I started with, if I hold the bond ...
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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
185 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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3answers
196 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 ...
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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
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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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
77 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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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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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
101 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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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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3answers
141 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
130 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
251 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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1answer
123 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
216 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
8k views

Can an American birth certificate be redeemed for money?

Can an American birth certificate be redeemed for money? Why is it printed on bond paper?
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2answers
112 views

Stop Order for Bonds

I have a bond and would like to know whether its possible to set something similar to a stop order, i.e. That you make an order to sell the bond if the bond price reaches a specified low value? My ...
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3answers
199 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
163 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 ...