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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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6 votes
2 answers
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is the treasury bill portion of a bond fund subject to state/local taxes?

Assume we have some fund (like a money market fund) with x% of the capital in treasury bills. Treasury bills are not state or local taxed. If I invest some capital into this fund, is my entire portion ...
JobHunter69's user avatar
2 votes
2 answers
343 views

How to estimate the price of a US Treasury

If you go to savingsbond.gov, choose the date 2023-07-17 and look at the CUSIP 91282CBM2, you'll see that it has a rate of 0.125%, a maturity of 2024-02-14, and a sell price of 97.03125. It's a 3 ...
John Rauser's user avatar
0 votes
0 answers
59 views

Questions relating to a novel asset pricing model

I'm creating a pricing model for an asset that is similar to a bond, but there are some quirks that I'm unsure how to work out. The asset is a tax lien, in which delinquent tax bills (usually on ...
Felix_Farb's user avatar
0 votes
1 answer
52 views

Interest rates effect on bank jobs and junk funds from the book intelligent investor

On chapter 6 of the intelligent investor with commentary by jason zweig Pg:147 is discussing about junk bonds. I ran through the text however I have some curiosity that I want to get addressed. Here ...
CREATIVITY Unleashed's user avatar
5 votes
1 answer
1k views

Questions about bond ETF

What happens when a bond expires? Will the mangers typically buy similar bonds or will they payout the cash (and hence the bond ETF will have a natural expiration)? So the difference between ...
k.dkhk's user avatar
  • 165
6 votes
2 answers
3k views

Why do secured bonds have less default risk than unsecured bonds?

Why do secured bonds have less default risk than unsecured bonds? Secured bonds are backed by specific assets of an issuer while Unsecured bonds are backed by all assets of the issuer - so shouldn't ...
sai_varshittha's user avatar
1 vote
0 answers
32 views

How to interpret auction/issuance results?

If a new bond (issuance size of 300M) was 3X covered and had 40 buyers, what does it mean?
the_brass_bottle's user avatar
0 votes
1 answer
829 views

How to read CDs: price vs yield vs bid vs ask?

I'm trying to understand CDs by comparing the two: NAME CLOSING PRICE CLOSING YIELD CURRENT BID YIELD CURRENT BID PRICE CURRENT ASK YIELD CURRENT ASK PRICE Mountain Commerce Bank 99.68 5.694% 99....
Danijel's user avatar
  • 298
4 votes
3 answers
1k views

How does a rollover work with Bonds?

I understand how a rollover works with personal loans. An easy example would be a car. Someone wants to buy a new car, but they still have an outstanding balance on their current vehicle. So the ...
troy beckett's user avatar
0 votes
1 answer
126 views

Is it worth it to diversify the "risk-free" portion of a portfolio across multiple assets?

I am looking into the constructing of my own sort of "structured product" and have been thinking about the risk profiles of the "risk-free" portion of products like this. Generally,...
QMath's user avatar
  • 103
0 votes
2 answers
136 views

How to understand this investment portfolio list?

I have a table with the colunmns ISIN, Asset Class, Description, Nominal/Quantity, Market Value CHF. I would like to check how much is invested in a specific company, let's say Boeing. How do I find ...
Nobody's user avatar
  • 822
0 votes
0 answers
59 views

Bond interest reported on Box 3 of a 1099-MISC

A friend of mine has a significant amount of variable interest bonds. In certain cases, I believe the issuer could have paid the bond off with stock. His broker reported the interest on these bonds on ...
Bob's user avatar
  • 1,673
0 votes
1 answer
754 views

Question about bonds coupon rate vs. interest rate

I'm new to this subject, but from looking around the internet, I know bonds have a coupon rate that is predetermined. However, the actual interest rate could change due to government and/or market ...
ronald christenkkson's user avatar
5 votes
1 answer
918 views

Are Bonds holder paid before Stock holders in USA unlike Europe AT1 Bond holders?

I see news that AT1 holders of Credit Suisse , a type of bonds that were a solution to 2008 crisis. ...They were created in the wake of the 2008 financial crisis as a way for failing banks to absorb ...
puzzled's user avatar
  • 1,016
-4 votes
1 answer
212 views

What does the EE stand for in EE bonds?

I wonder what the letters "EE" represent in "EE bonds", i.e. whether it's an acronym and if so, what the full form of the EE acronym? I searched quite a bit and couldn't find the ...
Franck Dernoncourt's user avatar
1 vote
2 answers
103 views

How is the yield of this particular bond calculated?

I am looking at this particular bond of coinbase company via Interactive Brokers website. Coinbase Bond ISIN : USU19328AA89 The rate of the bond is 3.4 so at the ask price of the bond at 62 the yield ...
Saugat Awale's user avatar
5 votes
1 answer
536 views

What's the real yield on this bond?

I've never bought bonds before and I'm looking into US Treasuries. The 3mo treasury below is described as having a ~4.9% yield. How is this number derived? To me, it looks like if I buy this note with ...
Max's user avatar
  • 151
-6 votes
1 answer
144 views

What part of the auction process for U.S. Treasuries makes it impossible to enroll in the auto-rollover feature after the initial order entry?

When trying to activate auto-rollover for an already purchased Treasury security on Schwab, I get the message: This security is ineligible for auto-rollover. Due to the nature of the auction process ...
Franck Dernoncourt's user avatar
-3 votes
3 answers
333 views

Why is YTW (Yield-to-Worst) not available for some callable bonds?

E.g., I am looking at 67765QDG8 ("Oh St Wtr Dev Auth REV 5% 06/01/2023") on Schwab. It is callable but the yield to worse isn't indicated: Bond details: https://i.sstatic.net/GNt20.jpg (&...
Franck Dernoncourt's user avatar
-1 votes
1 answer
614 views

What are the pros and cons, if any, of purchasing Treasury securities at a reopened auction (vs. a new, non-reopened auction)?

I read on treasurydirect.gov: When we hold a reopening auction, we are selling additional amounts of a previously issued security. This is reflected in the Tentative-Auction-Schedule.pdf. What are ...
Franck Dernoncourt's user avatar
-4 votes
1 answer
109 views

Is it financially preferable to purchase Treasury bonds on the primary market or on the secondary market? [duplicate]

Assume a retail investor who: can purchase Treasury bonds on the secondary market through their broker without any fees or markups (e.g., via Charles Schwab). can only submit non-competitive bids ...
Franck Dernoncourt's user avatar
0 votes
1 answer
151 views

Where can I find the indicative yield of soon-to-be-issued Treasury bonds on Charles Schwab?

In Vanguard, one may see the indicative yield of soon-to-be-issued Treasury bonds on https://personal.vanguard.com/us/FixedIncomeTrading: Where can I find the indicative yield for soon-to-be-issued ...
Franck Dernoncourt's user avatar
-4 votes
1 answer
95 views

Why does buying Treasury bonds on the secondary market make it easier to sell Treasury bonds at a later date?

I read: Buying on the secondary market also makes it easier to sell Treasury bonds at a later date. Why does buying Treasury bonds on the secondary market make it easier to sell Treasury bonds at a ...
Franck Dernoncourt's user avatar
0 votes
1 answer
65 views

How can one compare the yield of a municipal money fund with the yield of a municipal bond?

Let's consider the following municipal money fund and the following municipal bond: The Schwab Municipal Money Fund (Investor Shares) (SWTXX) discloses a 7-day yield (with waivers) as of 02/28/2023 ...
Franck Dernoncourt's user avatar
-3 votes
2 answers
175 views

Are there any downside in investing in a municipal money fund instead of purchasing municipal bonds assuming the money fund's yield > muni bond yield?

I wonder whether there exists any downsides in investing in a municipal money fund instead of purchasing municipal bond, assuming the money fund's yield (tax-free) is higher than the muni bond yield (...
Franck Dernoncourt's user avatar
5 votes
2 answers
666 views

How should I invest if I have much disposable income and cash on hand?

I'm a 29-year-old living in Europe and I'm looking for some investment advice. I’m fortunate enough to be earning roughly $28k per month after tax, and I currently have about $400k in cash sitting in ...
kettlepot's user avatar
  • 151
1 vote
1 answer
251 views

What's the difference between markups and "commissions, transaction fees and contract fees" when purchasing individual bonds on the secondary market?

I read on forbes.com: It can be difficult for investors to know the true cost of individual bonds on the secondary market, as prices frequently include markups. In addition, it’s entirely possible to ...
Franck Dernoncourt's user avatar
1 vote
1 answer
52 views

Understanding the "long-term corporate interest rates" and equity bond in the quote

I'm reading Warren Buffett and the Interpretation of Financial Statements and quote: Consider this: With long-term corporate interest rates at approximately 6.5% in 2007, Warren’s Washington Post ...
daisy's user avatar
  • 579
2 votes
1 answer
206 views

What are the downsides, if any, of purchasing bonds on the secondary market instead of the primary market?

Let's ignore the transaction fees from my broker, which tend to be higher for the secondary market. Are there any other downsides of purchasing bonds on the secondary market instead of the primary ...
Franck Dernoncourt's user avatar
1 vote
1 answer
194 views

How shall one take into account the accrued interest when purchasing a bond on the secondary market?

For example, I'm looking at the following US Treasury bonds ordered by decreasing yield to maturity (YTM) on Charles Schwab: If I simply want to maximize the returns, assuming no default risk, should ...
Franck Dernoncourt's user avatar
1 vote
1 answer
152 views

What accounts for the difference in yield to maturity (YTM) between brokered CDs and US Treasuries?

Looking at the Charles Schwab table below dated 2023-02-24 on the yield to maturity (YTM) for different brokered CDs and bonds, I see that for when the maturity is 1 year or higher, brokered CDs have ...
Franck Dernoncourt's user avatar
1 vote
1 answer
88 views

What types of bonds that you can only redeem but not sell in secondary markets?

There are some types of bonds that you can only redeem (e.g. I bonds), but not sell. In addition to I bonds, what other types of bonds that you can only redeem but not sell in secondary markets?
HelloDarkWorld's user avatar
0 votes
0 answers
69 views

When should I purchase Savings I bond up to the limit annually if money allows?

When is a wise choice to purchase Savings I bond up to the limit annually if money allows for higher interest rate and diversification purposes? When is it not a wise choice? Thank you.
HelloDarkWorld's user avatar
1 vote
1 answer
173 views

Does a US treasury bond guarantee my return of principal if I don't hold it to maturity?

I've read that a US treasury bond is generally thought to be the safest bond of all, but I'm not sure does a US treasury bond guarantee return of principal if I don't hold it to maturity? If not, why ...
HelloDarkWorld's user avatar
-1 votes
2 answers
144 views

Understanding bond ETF characteristics: Effective Duration and Yield to Maturity?

I'm trying to compare a few (BlackRock) bond ETFs using the following info: Weighted Avg Coupon Effective Duration Weighted Average Yield to Maturity Weighted Average Maturity For example: https://...
Danijel's user avatar
  • 298
5 votes
1 answer
409 views

Calculating Bond Yield from Quote

I cannot re-calculate the "asked yield" from today's Wall Street Journal for the following two Treasury notes/bonds: MATURITY COUPON BID ASK ASK-YIELD 5/15/2023 0.125 98.2500 ...
user2297550's user avatar
0 votes
0 answers
55 views

How do market-makers make a profit in the bond markets?

Do they sell at ask, buy at bid? Meanwhile, investors buy at ask and sell at bid. So, do the market-makers profit from the bid-ask spread?
darkuss's user avatar
7 votes
2 answers
3k views

Mortgage repayment strategy

This might be a dumb question, but I’m wondering if this is resembles a strategy that people take advantage of. Suppose you currently have a mortgage with an interest rate that’s much lower than the ...
Taylor's user avatar
  • 187
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 ...
gerrit's user avatar
  • 3,213
1 vote
1 answer
44 views

T-bills yield is the lower bound for the return?

When I look at the US treasury rates I see a number say 4%. That means if I buy 12m note today I will get 4% interest in 12M. This will be my return. What if the rates went down and as a result the ...
Medan's user avatar
  • 553
0 votes
1 answer
137 views

Investing in US treasury bonds

I would like to put my money in the safe investment but I would like to earn more than regular savings account has to offer. But I would like to understand the mechanics of it for a regular investor. ...
Medan's user avatar
  • 553
1 vote
1 answer
169 views

Why did SHY ETF only drop 5% YTD but IEF dropped 15% when yield curve is inverted

I don't understand the pricing of these two ETFs. I understand the effect of duration risk, thus, making IEF more volatile but this explanation would contradict with the inverting yield curve. In ...
Kaguya Ōtsutsuki's user avatar
12 votes
4 answers
4k views

Why would someone buy bonds with yields comparable to US Treasury bonds?

Fidelity is showing the following chart for current bond yield rates: For 1-year bonds, US treasure currently offers a 1-year yield of 4.62% which is above or comparable to: Corporate AAA/AA bonds: ...
JonathanReez's user avatar
  • 5,862
1 vote
1 answer
79 views

Relation between BoE rates and fixed Isa rates

I would like to understand the relation between BoE rates and fixed isa rates (if there is one). Is there any kind rule of thumb saying that fixed isa rates should be slightly higher than BoE rates? ...
aglearner's user avatar
  • 389
3 votes
2 answers
93 views

Does the 60/40 equity-bond portfolio presume a low interest rate environment?

My understanding is that 60/40 stock/bond portfolio relies on there being a negative correlation between equities and bond prices. But does the success of this portfolio presume a low interest rate ...
StatsScared's user avatar
3 votes
2 answers
475 views

Why do government bonds prices fluctuate? [duplicate]

I've heard that bond yields go up if interest rates also go up, which to me makes sense for corporate bonds since if interest rates go up company prices could fall since people spend less and ...
Linkin's user avatar
  • 713
2 votes
1 answer
47 views

How is the Price/Yield Duality Affected By Time?

A rise in interest rates causes a rise in bond yields which means their price goes down. And the opposite, of course. What I'm trying to understand is how the price of an ETF will change after the ...
Brian White's user avatar
2 votes
1 answer
256 views

Why are nearer dated corporate bonds yielding less than U.S. treasuries?

My understanding is that U.S. Treasuries are considered as close to risk free as you can get and in some places this yield is used in place of the "risk free rate" in performing calculations....
Andy's user avatar
  • 845
8 votes
1 answer
1k views

TreasuryDirect.gov not showing monthly interest gained on an I bond

I bought an I bond on treasurydirect.gov and it was filled on 10/1/2022 (more than 1 month ago at the time of writing). My understanding is that I bonds accrue interest monthly but when I login now it ...
sedavidw's user avatar
  • 249
2 votes
0 answers
46 views

Does the yield spread between inflation-indexed bonds and regular bonds overestimate inflation expectations?

Inflation expectations can be determined from the yield spread between inflation-indexed bonds and non-inflation-indexed bonds. For example, US inflation expectations for the next 5 years can be ...
Flux's user avatar
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