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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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1
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1answer
67 views

Is it time to invest in Bonds given the increase in interest rates? [closed]

Given the ongoing increase in interest rates, the value of bonds will come down. SO, is it time now to invest in bonds?
5
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1answer
174 views

Why would a CD Rate be higher than a Corporate Bond rate?

In looking at my brokerage account for fixed income products, I was looking at both CDs and Corporate Bonds. I was surprised to see that the best 1-year CDs had a higher interest rate than any AAA or ...
1
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1answer
118 views

Why invest in bond ETF if its trading value decreases?

Looking at bonds ETF like ZCS. It generates ~3% interest yearly. However when looking at ZCS trading value, it decreased about 3% this year. Question: If I had bought shares of ZCS a year ago and ...
39
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16answers
21k views

Why would I ever put my money into a savings account that returns less than the current inflation rate?

I like a safe investment as much as the next guy. But can anyone give me a good argument on why I should invest in a bond or a savings account that returns less than inflation? It seems to me that I ...
2
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2answers
299 views

Why are some medium term UK government bond (gilt) prices seemingly so disparate?

Looking at UK government bond prices and picking out one example of what I mean: Coupon Maturity Trading price Treasury 8% 2021 8 07-Jun-21 123.08 Treasury 4,3/4% ...
2
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1answer
67 views

How bidders determine price for T-bills?

Let's take for example 4 week T-bill issued today, 3/1/2018 (https://www.treasurydirect.gov/instit/annceresult/press/preanre/2018/R_20180227_1.pdf). Price of t-bill is determined on auction by ...
1
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1answer
66 views

Is the average default rate of a bond class annual or life of the bond?

In some web sites I see listed various "default rates" for different types of bonds, AAA, AA+, etc. Are those default rates per year, or over the life of the bond?
3
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1answer
118 views

Are state bonds considered “municipal” bonds?

I notice that in the United States, there seem to be three main kinds of bonds: "government bonds", meaning those issued by the United States Treasury, "municipal bonds" issued by municipalities, like ...
2
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1answer
2k views

Capital gains tax on US treasury bonds

If one buys 30 year bonds directly from the treasury, I understand the semi-annual interests are taxable at federal level. But what about capital gains in case the bonds are purchased at a discount ...
0
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2answers
313 views

Why is a 60/40 bond/equity mix not doing well?

The Vanguard Wellesley Income Fund (VWINX) is known as a highly conservative mutual fund composed of approximately 60% bonds and 40% equities. In the current markets, this seems like a good ...
1
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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-...
1
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2answers
170 views

How to mitigate 401k risk with bonds?

I’ve read that for 401k’s, you want to reduce risk as you get older and the primary means to do that is to move money out of stocks and into bonds. Assuming that principle is generally valid, then ...
1
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3answers
156 views

Which asset classes have a “built-in” long-term growth logic?

My understanding is that stock markets are expected to generate returns above inflation in the long run because companies are paying out dividends and because investors demand compensation for ...
0
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1answer
85 views

10-year bond yields' effects on the stock market

In layman's terms, why does the market struggle when 10-year bond yields rise? The DOW dropped 177 points today and this was apparently the key reason.
3
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1answer
189 views

Where to move money in 401k to reduce risk?

I have a 401k where about 75% consists of stock based mutual funds. I want to use the remaining 25% to help protect what I've earned, especially in case the stock market goes down significantly. To do ...
5
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3answers
562 views

Is it a bad idea to frequently change my stock/bond mix in response to the market?

I'm currently investing in a couple of Betterment retirement accounts, and if you have used Betterment, you know that the site makes it easy to adjust your portfolio mix of stocks and bonds (see ...
5
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1answer
353 views

How to cash US savings bonds as a successor trustee?

I have paper series-I bonds that are made out as follows, actual names omitted: "husband" and "wife" CO-TR UDT DTDT "date and name of trust" If both the husband and wife have passed away, what is ...
0
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1answer
61 views

Share price determination

Am new to trading, and just wanted to ask. Am I right in saying that if you have fewer sellers than buyers, or if no one wanted to sell their shares that then the price of said shares would rise? And ...
0
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2answers
172 views

Does a stock/bond that stays at level price lose money over time?

I have the concrete problem of choosing which of a bond and a stock I should sell. Below, the price of the stock is shown in red, while the bond is black. The rest are various indices in Scandinavia (...
5
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2answers
334 views

Are mutual funds composed of bonds really as low-risk as the bonds themselves?

I live in the US. I often see advice that a retirement savings account should include a combination of stock mutual funds and bond mutual funds, with the relative weights depending on the years to ...
1
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1answer
72 views

How to calculate internal rate of return [beginner]

I am an informatics student who was given an assignment to do with finance and we're not very financially literate. We are asked to theoretically build a platform to mimic bond exchanges. As part of ...
8
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1answer
272 views

Savings account versus corporate bond

I am looking at buying a bank corporate bond instead of placing money into a savings account. Say I buy a 2 year maturity corporate bond, that yields exactly 2% per year (in terms of yield to ...
0
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1answer
358 views

How to read WSJ US Treasury quotes

I am trying to understand how they calculated "asked yield". If anyone can explain it, I really appreciate it. I would like to see the mathematical formula and the calculation.
1
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3answers
560 views

How can I calculate the volatility(standard deviation) of a stock price? and/or ROI (return on investment) of a stock?

I'm trying to build my first portfolio, I've already have set out my monetary goals, graded my risk tolerance and determined the asset allocation I wanted to go with. So, now for the next step I need ...
0
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1answer
227 views

HYG vs JNK Popularity and Quality

Why is HYG more popular than JNK (respective AUMs are 20B and 13B) even though JNK has a lower expense ratio (0.49% and 0.40%, respectively)? It even seems that JNK's tracking error is lower than HYG'...
1
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2answers
73 views

Effect on Bond asset allocation if Equity markets crash?

Let's say "Tom" allocated a large amount of capital in some fund's (it's TIAA-CREF, actually) bond assets. In our fictional scenario 2 things are going to happen in the next year: The equity markets ...
4
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1answer
957 views

High Interest Savings Account vs Bond ETF

Which of the following is a better investment for long term investing and why? High interest savings account paying 2.3% interest, no account fees and the funds are protected by the Canada Deposit ...
2
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1answer
122 views

What affects bond value after an acquisition? [closed]

I have an academic question. If you are a bondholder and the company that issued the bond gets acquired what happens? I know that there are 2 possible paths: if there is a protection clause and if ...
3
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1answer
1k views

Live off of bonds as passive income?

Let's assume a person needs 3 thousand dollars for expenses (rent/food/etc) in one month and wants to invest in bonds to make passive income. How much money would he have to invest in bonds to make ...
0
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2answers
1k views

How to calculate the price of a bond based with a yield to Maturity, term and annual interest?

I'm trying to help my nephew with finance but I'm not sure if I fully understand if I have all the necessary details to answer this question. Here's the question: Say you want to purchase a 7%, 15yr ...
3
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1answer
83 views

Bond ETF NAV before dividends

This BlackRock page says that a bond ETF's NAV will fall by an amount equal to the dividend distribution when a dividend is paid out. I assume that means that the bond ETF's NAV rises as interest is ...
3
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1answer
117 views

Bond ETF Dividend Timing

Bond ETFs usually make monthly dividend payments. The ETF manager receives quarterly or semiannual coupons on the underlying bonds in the ETF. What is the time delay between the coupons received and ...
10
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3answers
3k views

What happens to Bonds if a company is bought out by a private equity firm?

If you have Corporate Bonds in a company and that company is bought out, by a Private Equity Firm. What happens to the bonds that were issued? Is the new Private Equity Firm responsible for that debt?
7
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1answer
838 views

Thorough Description of Yield to Maturity?

After some studies for the last month, I have encountered a concept that has just completely eluded me, and that is Yield to Maturity (YTM). Can someone explain the purpose and reasoning behind this ...
3
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1answer
732 views

Understanding bond margin, carry trade fundamentals

US Treasuries that have less than 6 months till maturity allow for 100x leverage, as the regulatory requirement is to put 1% of the market value down for each bond. So a $1,000,000 account could hold ...
2
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2answers
241 views

Futures and Bonds Pricing and Contract Terms

What do the listed futures price, say, here, actually mean? I am confused because my understanding of futures is that any two people can enter into a contract at any price with any delivery date. ...
2
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1answer
80 views

Can a bond ever be considered premium or discount if held to maturity?

I'm trying to understand bonds. I'm wondering if it is impossible to have a bond considered premium (or discount) if it is held for it's full maturity?
5
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1answer
252 views

What causes a saw-tooth like trend of a bond?

I'm curious why this bond (and likely many others) has a very regular pattern of vertical increases and decreases at what seems to me starts and ends of trading days. Visually it shows like a saw-...
6
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5answers
381 views

Understanding bond yields?

This is a screenshot from the top-level bond table on etrade.com, and I am having a hard time understanding it. I understand how bonds work, and what maturity/coupon/yield/etc are, but I'm not sure ...
2
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3answers
277 views

What are the chances of receiving interest when purchasing NS&I Premium Bonds in the UK?

I am considering buying 100 NS&I premium bonds, in the UK. Each $1 bond is automatically entered into a draw with a 1 in 30000 chance to win back what is effectively an interest payment*. My ...
3
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1answer
157 views

What is the meaning of “Debt has Support” regarding a bond?

On the Moody's sheet for every corporate bond I've seen there is a line that states whether the debt has support (Y or N). Can anyone tell me what this means or point me in the direction to find out? ...
0
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1answer
125 views

Yield curves and Bonds

Just struggling with putting the two together and google seems to be failing me. (1) Are the yields on yield curves annual continuously compounded rates, effective rates or something else like a "...
2
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1answer
269 views

Tax Free Zero Coupon Bonds and Taxes

I am an investor in Municipal bonds, including tax free zero coupon bonds. Imagine an investor buys a tax free zero coupon bond at 20 and then keeps the bond for 3 years and sells the bond at 15. He ...
1
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1answer
550 views

What happens when I buy Continuously-Callable bonds

I am looking at this bond: ILLINOIS ST GO 5% 04/01/2028 Callable (452152K59) Continuously-Callable on 07/04/2017 @ 100.00000 The price of this bond right now is $100.05000 (YTM=4.993%). In ...
2
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2answers
156 views

Should you sell your bond and buy one at a higher interest rate when interest rate increases?

Suppose you buy a bond 4% coupon 3 years at market rate with 4%.. In the first year you collected your coupon and interest rate rises to 5%. Value of your bond after 1st year: (40/1.05^2) + (1040/1....
0
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2answers
66 views

Ask value in the moment of maturity for bonds

Can a bond have a value above the nominal in the moment of maturity? For example, can a German Government Bond (nominal of 100%) that matures this month have a value of 120% for ask value? Or will it ...
33
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4answers
7k views

Opportunity to buy Illinois bonds that can never default?

Today Illinois bonds were downgraded to 1 above junk. The article. Citation from article: Despite the lack of a budget, Illinois has continued to cover payments due on its bonds, and, like other ...
6
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1answer
224 views

Does buying bonds individually offer an advantage over bond funds/ETFs in a low interest rate environment because bonds can be held to maturity?

I have heard this argument several times. Today's low-interest rate environment makes it risky to own bond funds/ETF. Investors will be seriously injured when interest rates start rising ...
0
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1answer
80 views

Income investing in rising rates environment

I have invested in bonds and REITS ETFs for income. But these investments probably will not do well if interest rates go up. Are there any investments that will do just fine or even benefit when rates ...
1
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1answer
73 views

Are all AAA ratings (from various credit rating agencies) equivalent?

I am peeking into holdings of various ultra-short term debt mutual funds (average maturity of bonds should be less than 1 year) and am coming up with AAA ratings of at least three different agencies: ...