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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What's to prevent majority shareholders in a company from dilluting a convertible note?
A company issues a convertible bond to an investor. It has a par value of $10,000 and can be converted into 5 shares.
The company currently has 50 outstanding shares, so the bond corresponds to ~9% (...
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1answer
98 views
Why does the asset price of REITs go down when (US) bond rates go down?
REIT s often pay up to 10% dividends so I would think they should become more valuable when the US bond interest rates go down . For example : In the last 30 days CIM has gone from 19.1 to 18.5 while ...
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votes
3answers
93 views
Variation in the price of bond
The price of a bond can vary because:
the yield curve changes
the flow of time (the time to maturity is reducing, for example compare a 1 year ZC bond with a 0.5 year ZC bond)
How can I quantify the ...
4
votes
4answers
535 views
If Turkey doesn't go bankrupt, is there any chance they won't pay bonds profits?
Suppose I buy 5000$ worth of Turkish treasury bonds today and the yearly interest rate for 1Y bonds is roughly 25%. Assuming Turkey doesn't go bankrupt in the next year, is there any chance I won't ...
2
votes
1answer
65 views
Bond income calculation question
I thought I got my Bond income right, but my brokerage company's calculator got me totally confused. So here is the problem:
I bought a note (US treasury) yesterday: cusip: 912828TN0 (secondary market)...
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vote
2answers
125 views
How to pick ETFs that hedge against stock market crashes?
If I want to hedge against a stock market crash the advice I often see is “diversify” and “buy bonds.” As a result, my portfolio is primarily Vanguard VTI and Vanguard BLV, the total stock market ...
2
votes
3answers
304 views
Bond fund vs High interest savings account
If you have some money - lets say 20k USD. Banks such as Ally provide 2.2% interest rate on Fixed deposits. Is investing in bond funds such as VBTLX safe and better than fixed deposit?
Understand ...
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votes
2answers
143 views
How can I practically buy bonds?
A moderately low risk of investment is a government bond. If I understand correctly, I spend €1000 on a 5-year bond at a yield of 1%, then in 5 years I get back 1000*(1.01)**5=€1051.01, unless the ...
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2answers
281 views
Is there a catch in investing in treasuries close to maturity date?
Is there a catch to invest to treasuries close to maturity date?
I don't want to lock the money for a long time, b/c the interest rate probably will go up. But I am concern that it's not that simple.
...
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vote
2answers
200 views
Bonds, interest rates and inflation
I was reading Learn to Earn by Peter Lynch and I came across a paragraph that has confused me to say the least. It is regarding bonds -
If you buy a $10,000 ten-year bond and hold it for ten years,...
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1answer
119 views
U.S. 10 year treasury bonds behavior during crisis
It's often advised to buy and keep government bond to protect ourselves against the next upcoming crisis. (For example, in a defensive stock portfolio you can have 50% of stock and maybe 30% of ...
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34 views
Explanation of Macaulay duration for bonds?
I understand how to calculate duration but I'm a bit confused about what it actually tells me and how it is useful and I can't seem to find anything that tells me.
If a bond has a maturity of 5 years ...
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vote
1answer
63 views
Bond prices changing due to interest rates
I feel as if I'm missing a fundamental step here. I'm aware that bond prices fall as yields go up; but what makes yields go up?
If I had a bond issued in the UK for example, and the base rate went up ...
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vote
2answers
218 views
What kind of bonds are ideal for short term investments
I have money in my bank right and I want to acces them in 1-2 years. I am not willing to take the risk in a stock portfolio, but willing to make bond investments riskier than buying government bonds.
...
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0answers
34 views
Computing risk-neutral probability of spot rates
I am trying to use a binomial model to price options wtih bonds as the underlying security.If the current term structure is flat at 6%, but next year, I assume the one-year spot rate will be either 5% ...
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votes
1answer
55 views
Bond Duration with respect to time
How would the duration of a coupon bond change with respect to time. Would you use the original price, and yield to determine the new duration, or would you have to calculate a new price for the new ...
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vote
2answers
408 views
Why don't investors in negative-yielding government bonds put money in positive-yielding government bonds instead?
According to this news article, USD10 trillion has been put into negative-yielding long-term government bonds.
https://www.ft.com/content/b131da2e-4f02-11e9-b401-8d9ef1626294
Why don't these ...
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vote
1answer
36 views
Selling ETFs in Roth IRA fund, in exchange to buy Bonds tax implications
I would like to sell ETFs in my Roth IRA fund, in exchange to buy Bonds.
What are the tax implications of this?
Even if the money is still held in the Roth IRA fund, would I get taxed?
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3answers
348 views
Are there any non-decreasing securities on the stock market?
Are there any securities traded on the stock market (i.e. ETPs) that never decrease in value?
As an aside (in case anyone mentions bonds):
I'm aware there's ETFs for AAA-rated government bonds, but ...
0
votes
1answer
97 views
Common diversification strategy for bond investment?
What is the most common diversification strategy for bond investment for a long term investor?
long vs. intermediate vs short term
inflation protected (TIPS)
US vs world
government vs corporate
etc. ...
0
votes
2answers
67 views
Mutual Fund or Municipal Bond
I am new to this Bond's so, I am not sure which one is a good investment like state or federal bonds? Is it worth to Invest now?
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3answers
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How does a bond's coupon rate differ from its market yield rate?
I'm trying to understand how bonds work and am confused by coupon rate vs market yield rate.
Suppose company Foo issues a bond with a face value of $1 million, a 4% annual coupon rate payable semi-...
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votes
1answer
200 views
Bonds near maturity better than 3-month CDs? Need help explaining Bond stats
I have a ton of money in a checking account earning 0% interest. I thought about buying 3-month CDs with 2.25% interest (or 0.56% per 3 months), something short term so my money isn't locked up for ...
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0answers
60 views
Bond ETFs slowing down after 2015. - why?
I see a lot of bond ETFs have very low gain, or even stay flat during 2015. - today.
For example Eurozone Government Bond or US Treasuries.
What is the reason for this?
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1answer
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Annualized return of bond fund
How do you calculate the say a 10-year annualized return of FTSE TMX Canada High Yield Bond Index. Please dumb it down as to the process.
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1answer
81 views
How often are callable bonds called?
I understand that this is highly dependent on several factors - but as I make calculations with YTM, YTC, and YTW, it would be helpful to understand the (very general) likelihood of a bond being ...
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vote
1answer
259 views
Coupon Payment Date
For a bond that pays interest semi-annually, is a must for a coupon payment date to fall on exactly the same day? For instance, if the bond matures in June 30, 2025, the coupon payment dates shall be ...
0
votes
1answer
43 views
Active Bond Funds - Interest Rate Swaps
I am a long time investor in an active Australian Bond fund (set & forget type of thing) but lately I have been doing a lot of research and I have realised that bond managers use a lot of ...
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2answers
49 views
How do stock markets react to economic data like consumer price index, home sales, and job data? [closed]
Where can I learn about how the stock market reacts with the consumer price index, home market market numbers, bond interest rates, fed interest rates , GDP change, how the euro bond market affects ...
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2answers
9k 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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votes
4answers
242 views
Calculating total return of a bond
I'm trying to understand bond yields, prices and coupons. I get the basic concepts (i.e. coupon is the interest paid in each period and prices and yields are the inverse of each other).
I don't ...
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0answers
78 views
How do I solve this exercise with bond and probabilities?
I have a bond with coupon rate 10% and annual coupon payments with maturity 3 years, face value 1000 and yield to maturity 8%. The bond pays the first coupon with 20% probability and nothing with 80% ...
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1answer
61 views
Annuity vs Bond Returns
The way I understand it buying a simple term annuity from an insurance company is like depositing money in a account that earns fixed interest compounded for the duration of the annuity and taking out ...
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1answer
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Extra large margin for government bonds
The value of my brokerage account is $1000x (Fidelity if it matters). Looking at my balances, I see that I am afforded an additional "government bond" buying power which is about $2250x. My regular ...
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0answers
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convertible bond
ABC Limited has in issue 14.5% convertible bond currently quoted on the NYSE at $108 per $100 nominal immediately after payment of the annual interest. The bond will be convertible into ordinary ...
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votes
1answer
69 views
Interest rate risk of bond that is held to maturity
While reading online about interest rate risk associated with bonds it stated that if an investor plans to hold a bond until its maturity then interest rate risk is insignificant since the final ...
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vote
1answer
48 views
Calculating Bond returns as an annual compounded rate
I've been reading up on bonds and the different methods there are of calculating the yield of the bond. So suppose I bought a $1000 face value with a 5% coupon that pays semi annually for $995 with a ...
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3answers
108 views
Bonds Yields and Coupon Rate
I read about bonds.
Let's say the face value is 1000 rupees and the coupon is 10%. The coupon will be 100 which will be issued at the end of the year if the maturity is one year. Is that correct?
...
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1answer
149 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
190 views
Holding period return and YTM
Suppose I purchased a 2 year bond at par $1000 paying 10% annually. Then the YTM is 10% but the holding period return would be 20%. Shouldn't those 2 values be the same since I am holding the bond to ...
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Why would anyone buy U.S. Treasury Bills?
From the Treasury Direct website, I saw this
Bills: U.S. Treasury Bills are a type of short-term security of one year or less, usually issued at a discount. The discount is the amount the security ...
0
votes
1answer
44 views
Effective Yield for Bonds
While reading up on the effective yield for bonds I noticed that it relies on the fact that the investor reinvests their coupon earnings in order to take advantage of compound interest. However, does ...
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votes
2answers
273 views
Why would I buy bonds? [duplicate]
Say I want to buy a bond that matures in 10 years, and that pays out 5% of once a year, so it has 10 payouts remaining. Say the value is 100$. Say the bond is being sold for 140$ today. I would be ...
0
votes
1answer
84 views
CAT & ILS Bonds/funds [closed]
I'm constructing an portfolio with the objective to diversify as much as possible.
I would like to include securities that are uncorrelated with the financial markets.
The last few days I've been ...
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votes
4answers
1k views
Are bonds worth the investment since they don't compound?
I was talking with my parents and they told me they have been buying 30 year EE bonds at $100 every 2 months with an interest rate of 4%. Because it is an EE bond, it does not pay a monthly coupon. So ...
2
votes
1answer
61 views
Treasury Expected Yield vs. Reality Difference
I looked at the US treasury website https://www.treasurydirect.gov/instit/annceresult/annceresult.htm and the usual percentage of interest one should get is around 2.4%. So, if I bought a 4-week ...
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1answer
46 views
Bond prices - present value
I'm reading a text of Macroeconomics - Financial Markets as a chapter.
It has a line which states: "Suppose you hold two-year bonds. Because the price of a two year bond is $P, every dollar you put ...
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1answer
65 views
basic questions about US bond trading
I'm new to the bond trading, but have some basic questions.
Let's suppose I want to buy the following bond today (11/6/2018)
See this
As you can see there, the maturity date of that bond is 11/30/...
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1answer
62 views
Characterising risks of an corporate/goverment bond ETF's
I have been looking at different conservative investment strategies such as 50/50 "interest fund", "global stock fund" and "the permanent portfolio".
As an alternative, I was looking for corporate ...
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3answers
343 views
Is there anything wrong with having a portfolio consisting of a single fund?
Aside from cash reserves, the entire portfolio is in a Vanguard mutual fund that has a good split between domestic stocks and bonds. The split is at the target ratio the investor is looking for. Is ...
