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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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2 votes
2 answers
3k views

How to short Turkey? How to get exposure to local currency-denominated debt?

After some research, I decided to open a short position on Turkish Lira (TRY), and I'm also looking to short TRY-denominated debt. To short the TRY-denominated debt, I'd need to short-sell a TRY-...
0 votes
1 answer
88 views

Can a retail investor enter into a reverse repo transaction?

Assuming an investor holds $1M worth of treasuries and urgently needs liquidity, can a retail investor enter into a reverse repo agreement through their broker with any of the institutions in an open ...
1 vote
1 answer
83 views

treasury bond future confusion

I'm not really understand how treasury bond futures work. Take the 10-Year T-Note Futures. Currently, it lists that the June 2024 one is settling for $109,000 (and each T-Note has a face value of $...
0 votes
1 answer
85 views

Do Treasury Inflation Protected Securities (TIPS) pay variable interest?

My Securities Industry Essentials License Exam Manual from Kaplan says the following: However, Investopedia says: As a result, investors receive higher interest or coupon payments as inflation rises....
0 votes
0 answers
43 views

Simple YTM calculation

I'm working the following problem, but getting the wrong answer. Any feedback appreciated. Suppose you bought a five-year zero-coupon Treasury bond for $800 per $1000 face value. Assume the yield to ...
2 votes
1 answer
187 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 ...
0 votes
2 answers
44 views

How to reconcile bond duration with yield responses in Long-Term vs Short-Term bonds?

I'm struggling to reconcile two aspects of bond behavior in response to interest rate changes: Longer-term bonds have higher durations, implying greater sensitivity to interest rate changes, which ...
1 vote
2 answers
99 views

How can I know the historical returns for a Vanguard bond fund, disregarding changes in share price?

This question is really about bond funds in general, but Vanguard funds are what I have experience with, so the details of my question and screenshots will be specific to them. But I hope this ...
0 votes
1 answer
62 views

Calculating Bond YTM for different maturities

I'm a bit confused on how to calculate the YTM of a bond with less than a full coupon's worth of periods remaining. If I have a bond with 7 months to maturity with the next coupon payment due in 1 ...
4 votes
2 answers
633 views

Is it feasible for a small retail UK resident to buy UK inflation-linked GILTs directly from the issuer?

I'm interested in buying individual inflation-linked GILTs directly in the primary market (directly from the UK Debt Management Office). To give some context, I want to do this as I understand the ...
1 vote
1 answer
155 views

Why MBS has lower YTM than treasury bonds?

I just checked, VMBS (Vanguard MBS) has yield of 3.73%, but VGLT (Vanguard government long term bond) has yield of 5.08%. I thought MBS is riskier and would require higher YTM by the market.
1 vote
1 answer
56 views

1099-int concern, tax filing

My credit union issued me a 1099-int for savings bonds that were cashed in 2023. Is it correct to say that box 3 of the 1099-int be the total of the interest earned plus half the face value of the ...
3 votes
1 answer
50 views

Where to find the variable interest calculation formula for a bond?

I am a relatively new investor based in Germany and am trying to decide whether to put some money (intended for a house downpayment in 3-4 years) into government bonds. For example this one: https://...
8 votes
4 answers
8k views

Can I convert interest income to capital gains by selling t-bills before maturity?

I've been buying 6-month treasury bills. The interest is taxed at maturity as interest income. If however it could be taxed as short-term capital gains, I could avoid paying any taxes on it because I ...
1 vote
1 answer
358 views

Callable and putable bonds

I am trying to synthesize everything I have learned about callable and putable bonds. Is the following information accurate? A callable bond bought at a discount will have yield rate greater than ...
2 votes
1 answer
1k views

Is the yield of a 30-year bond, issued 29 years ago and maturing in 1 year, equivalent to that of a 1-year bond maturing on the same date?

The question assumes both bonds are US Treasury bonds. I'm seeking clarity on whether the difference in original issuance date and remaining time to maturity impacts yield parity between these bonds. ...
1 vote
1 answer
85 views

Clarification on the 6-Month Yield Point on the US Treasury Yield Curve

Can the 6-month yield point on the US Treasury Yield Curve represent yields from securities originally issued with longer maturities (e.g., 1 year) but now have only 6 months left until maturity? ..Or ...
1 vote
1 answer
204 views

Understanding how bond prices change

I came across following statement regarding Indian debt funds in ValueResearch ebook: The RBI announced retracting ₹2 lakh crore of banking funds through a 14-day reverse-repo operation in January ...
-4 votes
2 answers
195 views

Unintentionally bought 10kUSD of I bonds with a few cents: how can I correct my mistake and properly purchase 10kUSD of I bonds?

I bought 10kUSD of I bonds via treasurydirect.gov. The bank account I mistakenly used to purchase the bonds only had a few cents. To my surprise, my account on treasurydirect.gov indicates that the I ...
0 votes
2 answers
70 views

Bond return in low-rate environments

Assume a simplified world where rates are 0 %, and bonds only carry rate risk (no spread risk, etc). Let's say I invest in a 10-year bond. After 1 year has gone by, if rates have gone up, I've ...
0 votes
2 answers
80 views

Price for a bond that was issued in the past?

I understand that for US treasury bonds, that the price, its current yield and annual coupon is related by price = coupon/yield. But the prices and yields when I look them up online are always denoted ...
0 votes
1 answer
93 views

On coupon rate versus yield

I have seen the following roughly spelled out (or else tacitly used) in a few of my finance textbooks and I was hoping for confirmation and, ideally, a proof: Coupon rate equals APR of yield if and ...
0 votes
1 answer
80 views

What does Takeout and Putup mean?

What does takeout and putup values mean in fixed income trade and how would you interpret these values?
0 votes
2 answers
299 views

Why is bond issue price lower than 100?

I have a question about this bond: https://markets.businessinsider.com/bonds/braskem_netherlands_fin_bvdl-notes_202323-31_regs-bond-2031-usn15516ah53?miRedirects=1 If you look to the right, you can ...
2 votes
5 answers
773 views

If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?

Let’s say I have a loan at 3% for 10years for $100,000. After one year rates in the Loan market rise and are at 6% for the same type of loan. Why wouldn’t the payoff amount of the loan be discounted ...
3 votes
2 answers
105 views

Which of my tax-advantaged accounts should I hold my bond market index funds in?

I have traditional, Roth and SIMPLE IRAs. I'd like to get some total bond market index funds (VBTLX). In terms of taxes, gains, dividends, etc. is there any difference between holding the fund in a ...
3 votes
2 answers
208 views

Does the capital gains tax apply this tax year or next if I initiated a sale today but it won't complete until the new year?

I have tried several Google and Stack Exchange searches, and I tried looking through the IRS website, but I haven't found anything that answers my specific question. I may have made a mistake. Last ...
3 votes
2 answers
533 views

Why Wouldn't A Bond Issuer Call A Bond When Rates Fall?

See CUSIP 172967AS0, issued by Citigroup in 1998, with a 6.875% coupon and a maturity date in 2098, a 100-year bond. Fidelity says this bond is continuously callable, so why didn't Citigroup call it ...
1 vote
0 answers
27 views

What are gross concessions on filling 424(b)(2)?

In this filling, for the bond with CUSIP 92346MLS8, the "Gross concession" is 3.150%. Is this the total fee paid to issue the bond? Why is it so high for a bond with a fixed 5.3% coupon?
4 votes
1 answer
707 views

Why does SGOV pay dividends twice in December?

The US ETF SGOV pays dividends once a month from Feb. to Nov, then twice in December. Why? I'm reading it may be for tax reason. If that's correct, what's the tax reason? From https://seekingalpha....
1 vote
1 answer
198 views

Can F1 Student Resident Alien Buy From Treasury Direct?

I've been in the United States for 10 Years now on F1 VISA. I've filed taxes and got a SSN 5 years ago. I have a drivers license and an EAD. I'm a resident alien for tax purposes. Can I open an ...
3 votes
2 answers
468 views

Yields and prices when consider demand and supply

I know the relationship between price and yield for a simple coupon bond. When the rates go down price goes up. However, when rates go down, I assume bonds are less attractive and as a result the ...
0 votes
0 answers
39 views

Choosing government bonds of similar maturity to hold to maturity, shall I just go for the highest YTM one

I wanted to buy some government bonds of roughly 3yrs to maturity and planned to hold it to maturity. My bank's app showed 3 bonds of that maturity but one is 0.1 percentage points higher in YTM. Is ...
0 votes
1 answer
42 views

Why are these bond portfolio prices equal (case study on 2012 Greek debt restructuring)?

Consider the following case study from Berk and DeMarzo's Corporate Finance. My question is about the first sentence in the last paragraph: Assume that participation in the swap was voluntary (as ...
13 votes
4 answers
3k views

Why doesn't my bond ETF provide a hedge against stock indexes in the way I thought it would?

I own BND in an attempt to hedge my portfolio against my stock ETF declines, based off of the Bogleheads philosophy. I've noticed that with this ETF, over the relative long term, I've made but modest ...
0 votes
1 answer
143 views

Why doesn't a bond's dirty price account for all coupon payments?

I've been learning about bonds' dirty prices from this video. The dirty price is the clean price plus any money that has theoretically accumulated since the last coupon payment. I'm wondering why the ...
18 votes
6 answers
5k views

Inflation-linked bonds — what's the catch?

This the question Why is there a discrepancy between current inflation rate and I bond rate in the US? I have learned that, at least in the USA, there exist bonds where the yield is guaranteed to be ...
2 votes
1 answer
88 views

In what cases is it profitable to sell currently-held bonds in favor of buying newly issued bonds?

Assuming there is no arbitrage, and say the Federal Reserve hiked rates from, say, 2% to 3%. I am holding a US treasury bond with a YTM of 2% (before the drop in price due to the rate hike). If I am ...
1 vote
1 answer
132 views

What's the benefit of buying municipal bonds on the secondary market?

"Buy munis!", they say... "they're tax exempt!", they say... but are they? It looks like you're paying income tax on most of the Yield To Maturity (since interest rates have gone ...
1 vote
1 answer
1k views

If interest rates remain the same, what effect would this have on long term treasuries?

I'm interested in gambling a few thousand on TMF, a triple-leveraged 20+ year bond fund. It tracks the daily returns of the ICE US Treasury 20+ Year Bond Index. If the Fed neither raises nor lowers ...
4 votes
1 answer
509 views

Are there any benefits to purchasing T-bills directly from TreasuryDirect?

I have been purchasing T-bills from TreasuryDirect, but I recently realized that I can also purchase new issue T-bills from Fidelity. The UX is better and when the money is between bond auctions, it ...
0 votes
2 answers
73 views

What is the probability of each tier of creditor/equity claims being made whole?

In bankruptcy, the broad "tiers" for debt settlement are: Secured debt (going in order of first lien to second lien and so on) Priority unsecured debt General unsecured debt Preferred ...
0 votes
1 answer
615 views

Why is anyone buying Japanese bonds given that yield less than 1%?

As per the best data I can find online, Japanese 10yo bonds have a yield of less than 1%, which is lower than yields for US and German bonds. Additionally the yen is experiencing rapid inflation at ...
1 vote
1 answer
125 views

Tbill Rollover Interest

I am buying 52 week t-bills with one rollover through Treasury Direct. Being OID interest based, when I reinvest, will I be investing the full maturity t-bill value in my reinvested t-bill or will I ...
2 votes
2 answers
221 views

For this I-bond calculation there's a tiny adjustment to the rate (fixed rate x semiannual inflation rate) it barely changes the rate.Why is it there?

From https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/#cerates Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation ...
2 votes
1 answer
80 views

I bonds interest calculation

Current I bond annualized rate is 6.89%. How much interest will accrue in the next 6 months on a $10,000 purchase. Note 6.89% is not what will be earned in a year since the next 6 months will have a ...
0 votes
1 answer
248 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 ...
13 votes
1 answer
6k views

Why is this T-Mobile bond priced so low?

T-mobile Bond: https://markets.businessinsider.com/bonds/t-mobile_usa_incdl-notes_202020-26_regs-bond-2026-usu88868ag68?miRedirects=1 So the current price is 39.20. It has a coupon of 1.5%, and will ...
1 vote
1 answer
194 views

Why is the price of a 1 year to maturity bond so high?

I am looking at the 2½% Index-linked Treasury Stock 2024 bond and I can't understand why its price is so high (£377). There is only a year left!
1 vote
2 answers
118 views

Market risk for TIPs vs. I Bonds

Treasury Direct has a good comparison between TIPs and I Bonds: https://www.treasurydirect.gov/indiv/products/prod_tipsvsibonds.htm However, I want to make sure I understand when you can lose ...

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