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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8
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5answers
2k views

Roth IRA = Emergency Fund. Any Safe Investments?

I've been building my emergency fund through automatic deposits into a Roth IRA at TDAmeritrade. This has been working well, since the money is out of sight, out of mind, and I can easily withdraw it ...
5
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6answers
1k views

10-year real Treasury bond yield: How can it be zero, or negative?

How can the 10-year real Treasury bond yield be zero, or negative? That's like giving out money for free, right? Does that mean that people expect the value of the dollar to go up (deflation)?
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1answer
513 views

Understand interest rate risk on a bond

I was wondering why there is interest rate risk on a bond that a financial services firm has sold, besides default risk on the bond? As far as I know interest rate risk means the risk that ...
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2answers
131 views

Where can I find information on corporate bonds (especially those rated as “junk”) ?

I've been searching a number of financial sites and I can't seem to find a way to browse for companies that are selling bonds, and what rates/durations those bonds are at. How does one go about ...
2
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1answer
148 views

Interest rates and bonds: What is their relation?

I read in a study text that: When interest rates are decreasing, investors will migrate their bonds from short- to longer-term ones When interest rates are increasing, investors will migrate their ...
2
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2answers
3k views

Where can I find historical rates for corporate bonds?

Are there databases that track corporate bond interest rates and rates of return? How do I get access to them?
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2answers
213 views

Liquidity of U.S. treasury bonds and moving in and out of them before maturity?

I am curious about the liquidity of U.S. treasury bonds. I always hear about how liquid they are. I like the rates of the 30 year treasury bonds but lets say I don't want to park money for 30 years. ...
5
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3answers
1k views

What is the purpose of a Zero Coupon Bond?

Why will someone prefer to buy a zero coupon bond rather than a >0% coupon bond?
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2answers
358 views

What is the coupon percentage of a perpetual bond specified relative to?

In "a 10% bond", I have been told 10% means the coupon rate of the bond relative to the par value not the price when it was bought. But in "a 10% perpetuity", there is no par value to paid at the end ...
2
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2answers
179 views

How to buy a bond?

Since this question has been a tumbleweed I wanted to update the description to see if I get any answers. This is the information that I have: PR SALES TAX FING CORP A-1 RV CAV6.30 BE/R CUSIP: ...
3
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3answers
346 views

How can a bond guarantee a 5.5% return rate?

How can a bond guarantee a 5.5% return rate? I am not sure how this is possible. I see that Puerto Rico has a municipal bond that gives more than 5.5%. How secure are these AA bonds? Why other AA ...
11
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5answers
350 views

What to sell when your financial needs change, stocks or bonds?

Say I have a portfolio composed of 80% index funds, and 20% bonds. This portfolio was created under the assumption I would have a relatively large income, and wouldn't need to withdraw any funds for a ...
2
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2answers
256 views

What's behind the long secular bull market in U.S. Treasuries?

Long-term treasury yields have been going down fairly continuously since the mid 1980s. Right now, the 30-year yield is under 3%, meaning that it is likely to barely keep up with inflation if held to ...
5
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5answers
8k views

Does the interest rate on a given US Treasury Bond change over time as the market rate changes?

This is obviously a very basic question: Does the interest rate change on a given US Treasury Bond as the market rate changes? For example: Let's say I buy a T-bill today, and the rate on the bill ...
9
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3answers
403 views

What is a “Junk Bond”?

I was reading Barbarians at the Gate and I read that junk bonds were required to do large leveraged buyouts. What is a junk bond and how does it differ from a regular bond? Why is there higher risk/...
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5answers
884 views

Are long-term bonds risky assets?

I think bonds are debt/loan and fixed-income, so they are risk-free, both short term and long term. But it seems like Bodie's Investment thinks long-term bonds are risky: For example, assume that ...
7
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4answers
199 views

Does the market-value of a bond matter after purchase if waiting until “maturity”?

If I'm buying bonds at a certain value, and later on the market value drops (the company or country is in trouble, for example), but I still believe they would be able to pay – do I have ...
7
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3answers
1k views

What factors affect the yield and “trade value” on an exchange of a junk bond ETF?

In an effort to further my grasp of financial derivatives available for speculation and losing money, I realize I need further understanding of how "high-yield corporate", aka junk bond ETF's, "work" ...
0
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1answer
128 views

Effect of different macro trends on different asset classes

Briefly if possible, what are the effects of the following macro environmental trends: Above-average / high inflation Deflation On the following asset classes: Non-dividend-paying Equities Dividend-...
3
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1answer
301 views

SBI term deposit versus SBI bonds

For an investment of couple of lakhs over a period of 2 years, what factors should I consider in evaluating these investments side-by-side? buy SB1 term deposit at 9.25 buy SB1 9.25% N1 bonds from ...
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3answers
3k views

What is the difference between a stock and a bond?

I am just learning about finances (only 14 years old) and have heard about Stocks and Bonds and I would like to know the difference between these two things and wonder why would I invest in one or the ...
8
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3answers
2k views

Is there a widely recognized bond index?

S&P 500 is a widely recognized stock index, that many people benchmark performance against, and you can find 'passive management' funds that compete to replicate it at as low a fee as possible. ...
4
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1answer
206 views

Will U.S. downgrade actually help large, financially sound corporations?

From everything I read, the U.S. debt downgrade is expected to drive up borrowing costs all across the board. But I have a theory that it will actually lower the borrowing costs of large, financially ...
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2answers
8k 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?
8
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3answers
3k views

Why does interest rate go up when bond price goes down?

Why does interest rate go up when bond price goes down? Thank you very much!
4
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1answer
83 views

How to approach sale of municipal bonds (USA)

I am in a fortunate position of having invested income (about $41K) from a trust becoming fully mine in August. The trust was previously maintained by my mother, who invested the money in tax-free ...
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2answers
2k views

Asset classes: Is a Guaranteed Investment Certificate (GIC) considered a bond?

When we think of asset classes, there are 2 types: stocks and bonds. Where does an investment like a GIC fit in? It is not a bond, nor is it a stock.
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2answers
210 views

What are the implications of falling US Treasury Bond Rates?

As seen from the table, the rates have decreased whether you compare to yesterday, last week or last month. Does it mean that investors think that the US is going to be deflating?
7
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2answers
615 views

Looking for suggestions for relatively safe instruments if another crash were to happen

My current investment strategy involves having 20% as liquid cash, 30% as bonds (aggregate bond fund), and 50% as a mix of domestic and international equity. The stock portion is invested via index ...
4
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3answers
2k views

Does an issue of bonus shares improve shareholder value?

What I know is that, a splitting of shares doesn't improve shareholder value. It merely increase the number of shares. Hence, a splitting of stock shares improves market liquidity. But what about ...
6
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3answers
277 views

Bond Vigilantes: Prices, yields and incentives

I read on Wikipedia that a bond vigilante is "a bond market investor who protests monetary or fiscal policies they consider inflationary by selling bonds, thus increasing yields.". I tried reading ...
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2answers
2k views

How would bonds fare if interest rates rose?

The first thing I learned about bonds is that when interest rates rise, the price of existing bonds tends to fall. Unfortunately, I didn't learn much else about bonds. So I have a couple questions ...
5
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1answer
284 views

Who sets the prices on government bonds?

I noticed my country Greece wanted to sell bonds last year and they were stating "If they go above 7% we won't sell.". But who sets the price if not them? Why can't they say "the price is 5% and if ...
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2answers
17k views

What is the difference between a bond and a debenture?

What's the difference between a bond and a debenture? Are they simply different words used to mean the same thing? (e.g. debenture sounds more business-like than bond).
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2answers
3k views

What is the best way to invest short term without losing principal?

My wife and I were planning to buy a house this year, but the plan fell through, so right now we are sitting on the money that we saved towards down payment and renovations (prior to now money was in ...
4
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2answers
96 views

What is the best resource to research the current state of asset classes for mutual funds?

I have a fairly simple asset allocation as follows: 50% Large Cap stocks 15% Small Cap Stocks 5% REIT 10% International Stocks 20% Bonds What is the best web site to track how each one of these ...
6
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2answers
972 views

Why is my corporate bond portfolio decreasing when my stock portfolio is increasing?

For some reason my CFT, CIU, CSJ, and LWC are -2.95% overall, when the rest of my stocks are at +8%. Is there any specific reason why Corporate Bonds are going down while the market is climbing?
3
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1answer
267 views

Are short-term bond funds subject to the same risk as long-term bond funds?

So much in the news about inflation, and interest appreciation dooming long-term bond funds. Are short-term bond funds affected by the same risk? Does this make investing a portion of your portfolio ...
7
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2answers
1k views

In the U.S., what is the easiest way to buy Australian government bonds?

The NY Times says: He cited the example of buying a one-year Australian government bond, yielding 5.25 percent. He said he believed that the American dollar was going to lose value and the ...
18
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5answers
9k views

What is a good asset allocation for a 25 year old?

I have a mid-sized portfolio (under $100K). And am currently in 100% stocks. I have seen some advice being given that states 80/20 bonds will yield similar returns as 100% stocks with less volatility.
7
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3answers
2k views

Where to find out conversion ratio between General Motors bonds and new GM stock?

I bought some General Motors bonds (ETF-traded under "XGM" symbol) when they were at depressed prices, before GM declared bankruptcy. GM is supposed to be having an IPO sometime in November, and ...
5
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1answer
1k views

Are money market instrument and short-term debt same?

I am learning some basic concepts in investment. Here is my questions: Are money market instruments and debt (short-term) same? From the two links I provided, they look almost the same to me, ...
4
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2answers
268 views

Are bond ETF capital gains taxed similar to stock or stock funds if held for more than 1 year?

Are gains on bond ETFs held for more than one year taxed at a lower rate, similar to stocks and funds holding stocks? I'm referring to the change in price of the fund, not dividends.
5
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2answers
188 views

Why are both government and commercial bond prices rising?

For the last 2 months both Gilt (UK government bonds) and UK commercial bond prices have increased. Many commentators have said the flight to government debt is a response to stock market uncertainty, ...
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3answers
3k views

How do you short US Treasuries?

As the US government continues to issue record levels of debt, I don't think it can continue to sell that debt at 2 - 3% interest. It will face the simple supply/demand law of economics - the more ...
1
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1answer
130 views

Will bonds (including international bonds) be able to offer more than 7% annual return?

I am presently getting a 6% return on my savings in a high-interest account, calculated daily, paid monthly. I regard stocks as too risky for my 4 year savings plan but am interested in bonds as they ...
4
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1answer
1k views

How to buy Greek bonds either directly or via ETF?

Is there an online brokerage, for UK citizens, that provides access to Greek bonds? Interactive Brokers doesn't. Alternatively, are there other assets (say ETFs) that have a percentage invested in ...
10
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3answers
1k views

Long-term cash-equivalent ETFs for “cash” allocation in a portfolio?

My retirement account goal analyzer advises that I keep 3% in cash. My retirement date is over 30 years from now, so I can tolerate heavy volatility and certainly don't need liquidity. Does it make ...
7
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2answers
139 views

Do tax-exempt bond fund earnings need to be reported on taxes?

I'm deathly afraid of having to report bond/stock earnings to Uncle Sam. I feel like my tax returns are complex enough and I don't want to deal with any additional complexity. I'm looking for a way to ...
10
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3answers
342 views

What is a bond fund?

This answer suggested to invest in a Bond Fund and stated that it has been working well for that person. What is a bond fund? What are it's pros and cons?