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Questions tagged [fixed-income]

A fixed income security is an investment that provides fixed periodic payments.

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43 views

Shortcut for calculating interest rate risk

Is there a rule of thumb to calculating the inverse relation between a bond’s price (or any fixed income payout) and its interest rate? I’m actually more interested in bond ETFs, so something along ...
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44 views

Does it make sense to buy municipal bond if you're not in the highest tax bracket?

Municipal bond has tax benefit. If market is efficient, doesn't that mean the wealthy investors (in highest tax bracket) will bid up the price (lower the yield) until the "tax equivalent yield (...
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7 views

Australian 3 month bank bill rate and overnight index swap rate

Could someone please tell me what the BBSW3M is? I am reading it is a forward rate, & therefore captures any forecast expected RBA cash rate changes. But how is it a 'forward rate'? Isn't the BBSW ...
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1answer
32 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
331 views

Saving rate higher than the Fed rate: Too good to be true?

Recently I saw this Intrx company advertise a savings account with 2.91% APY on Facebook, and claim it would be FDIC insured up to 100M. They explain their business in the following: We are an ...
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40 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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35 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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1answer
32 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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40 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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43 views

Selling Interest Rate Swaps

Suppose two parties have entered into an interest rate swap. Would it be possible for one party to sell their portion of the contract to another party? Or would that party have to enter into an ...
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1answer
41 views

How to get my head around FRAs

I'm completely befuddled by FRAs - forward rate agreements. Take a look at this definition ....But, how EXACTLY does that fix an interest rate for me at all? There's nothing in that definition that ...
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3answers
75 views

Is a bond's price dependent on yield or is it the other way?

Do changes in the price of a bond cause the yield to move? Or is it the change of rates and consideration of other risks that cause the yield to change which then affects the price of the bond?
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115 views

Does an equivalent to stock “options” exist for CDs?

I was curious if an individual is able to purchase the option to get a CD at a particular rate in the future? Or alternatively defer the purchase of a CD and lock in the existing rate.
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Why don't bond makers just get loans?

I was just looking at investment opportunities, and I found a number of places offering bonds paying up to 12% interest over two years. My first thought was, I can get a loan from my bank for 5% ...
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1answer
62 views

Treasury bond yield

I am trying to learn about valuation and yields for treasury bonds. For the Treasury Bond maturing on 11/15/2018, initially sold in 1988 with a 9% coupon, it states that the yield to maturity is 1.66%....
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104 views

Bond Issuance Question

During a new bond issue how do the bankers/advisors determine an initial price for the bond? I know that during an IPO the investment bankers will guage demand for the issue, and price the issue ...
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2answers
174 views

Do Junk Bonds have higher coupon rates then investment grade/treasury bonds

I'm trying to understand how junk bonds would incite investors to purchase them, did they offer higher coupon rates then the prevailing market or were they simple priced cheaply in order to ensure a ...
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1answer
89 views

Are High Yield Bonds issued at a premium or discount?

Will the demand for a higher yielding security cause the high yield bond to be issued at a premium, or will the risk of default and other risks cause the bonds to be issued at a discount to face value?...
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19 views

Do CDO tranches have different maturities?

While doing a bit of research on CDO's online I stumbled upon something that I cant quite clear up. For a sequential pay CDO with a reinvestment period are all the tranches paid down (assuming no ...
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2answers
190 views

What do people mean when they say US 10 year Government Bond?

I am very new to investing and I am particularly interested in fixed income product. I am just wondering what do people mean when they say US 10 year Government Bond? This term confuses me as I can ...
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1answer
107 views

In what circumstance would a company want to establish an SPE to engage in following investment?

I was reading a book explaining Special Purpose Entities (SPEs) and an example is used in the book: a firm could sell loans it has made to customers to an SPE that issues bonds to purchase the ...
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2answers
545 views

When are short-term US Treasury funds (ETF or mutual) a good investment?

I want to understand the rationale behind buying into a short-term Treasury ETF (or mutual fund). In particular, I want to understand how it compares to buying short-term Treasury bonds/bills directly ...
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3answers
751 views

Cash out mutual funds or stay invested? Risk aversion choice

I am from India. Stating this upfront to focus on Indian context , while the question is generic in nature and would like to get a wider response By way of background I am in late fifties , retired ...
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1answer
100 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 ...
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1answer
59 views

Are senior loans appropriate to retail investors ?

I understand senior loans to be a class of unsecured debt instrument which a company has to prioritise payment of over other unsecured debt in the case of failure. In principle, this appears to make ...
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1answer
128 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? ...
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1answer
89 views

Exit 5 year locked investment, is verbal promise from bank enough?

I have 3 year locked fixed-income investment, I talked with financial advisor and I was not able to take decision how to redirect it immediately so we agreed to meet in about a week. I met her as ...
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2answers
148 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....
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196 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 ...
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1answer
2k views

Are interest income from U.S bonds subjected to withholding tax like U.S dividends to foreigners?

Foreigners are subjected to 30% withholding tax on U.S stocks' dividends. Does the same withholding tax apply to U.S bonds? Any difference between the treatment for Treasury bonds and corporate bonds?
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1answer
45 views

Which field should I use for getting the income yield of this bond ETF?

I am looking at "iShares Global Corp Bond UCITS ETF" listed on the London Stock Exchange. On the website for this bond ETF, there are fields like; "distribution yield" "flat yield" "Weighted Avg ...
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1answer
578 views

What does DIST refer to in this equity ETF?

I am looking at this bond ETF "iShares MSCI Japan UCITS ETF USD (Dist)" which is listed on the London stock exchange. What does DIST refer to in this equity ETF? I cannot find the answer from the ...
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1answer
94 views

More sensible to have short term Fixed Deposit or liquidate a Recurring Deposit for income tax payment?

In 3 months time I have to pay my income tax, and I need to accumulate some money for that from my salary payouts, since I've invested my savings in debt and mutual funds and taking it out will invite ...
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1answer
62 views

LIBOR and fixed income [closed]

So I am just learning about fixed-income markets and securities, and LIBOR pops up all the time. Why are interbank offered rates used as reference rates in floating-rate debt?
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1answer
425 views

Pros and cons of bond ETF versus traditional bond mutual fund?

Bond ETFs are easily available on stock exchanges today. Bond mutual funds have been around for a long time. I am not sure which to buy to build an income stream as a fixed-income investor. What are ...
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1answer
151 views

Are Italian bank bonds as good a deal for retail investors as it seems?

The Monte Paschi announced bailout claims that retail investors will be protected from losses imposed by the bailin by compensating them for up to €100k (the financial services compensation scheme ...
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1answer
391 views

Why are premium bonds more likely to be called than discount bonds?

For premium bonds in the US (ie, bonds trading at a price over par) with a call option, why are they more likely to be called than a bond trading at a discount?
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1answer
58 views

Is TDS is applicable to closed FD accounts in India?

I have a salary account in Citi Bank, I used keep my savings in citi bank Multi deposit scheme. I'm doing this for past one and half years, But I came to know that there is TDS on Deposits if the ...
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1answer
77 views

Fixed Income Portfolio

I am in the last 10 years of my professional career. Kids left the nest. No debts. Have some disposable income to invest towards retirement over the next 10 years before I retire. I am looking to put ...
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1answer
124 views

How much would I need to save to keep a fixed income consistent?

If you have a fixed income that was going to continue for the rest of your life, what portion would you need to save to keep it consistent? For example, if you were to get 100,000 per year non ...
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1answer
189 views

How to calculate the value of a bond that is priced to yield X%

I am currently practicing for a beginners exam in finance. One of the previous exams had the following question: You own a 2 year, £1000, 7% bond, with semi-annual coupons. If the bond is priced ...
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3answers
296 views

Why would I buy a bond with a negative yield?

The only reason that I can think of is because I expect the bond to appreciate in price thus offsetting the loss in yield. I could still end up with less money than I started with, if I hold the bond ...
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1answer
614 views

Where can end-of-day data be downloaded for corporate bonds? [closed]

I would like to download historical end-of-day prices for corporate bonds. What are some websites for doing so? I do not mind paying for the data but Bloomberg is too expensive, even though it is very ...
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1answer
227 views

Do buyers of bond ETFs need to pay for accrued interest?

When buying normal bonds, the buyer needs to take note of accrued interest. He should take note whether the price quoted is a clean (excludes accrued interest) or dirty price (includes accrued ...
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3answers
172 views

Are junk bonds advisable to be inside a bond portfolio that has the objective of generating stable income for a retiree?

Suppose a person has retired. He would like to construct a bond portfolio that generates stable income for his remaining days. Is it advisable to include junk bonds in the bond portfolio for that ...
2
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1answer
91 views

Loan against fixed deposit

I have a few FD's locked in for a period of 2 years. However, I am not very liquid at this point and I need access to that money immediately. What are my options? Can I take a loan against my Fixed ...
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1answer
98 views

Fixed Index Annuity a wise “secure” investment?

If I have 40% of my portfolio allocated for "secure" investments (such as bonds) are fixed index annuities a reasonable choice to use in this allocation?
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4answers
2k views

I'm not broke, but I'm feeling stuck on a fixed income

I'm living on a fixed disability income, with little hope of ever being able to work again. I cannot receive any income of any kind while on disability (or I have to pay it back anyway, and risk ...
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1answer
125 views

Where should I invest if my new 401(k) provider doesn't offer a low risk option?

My company is changing 401(k) providers. I have my small nest egg in a guaranteed interest account with the current provider. The new provider does not offer a fixed interest account. Furthermore, ...
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1answer
3k views

Why YTM is higher than current yield in discount bond

I learned that in discount bond, coupon rate < current yield < YTM and the relationship will always hold. I can figure out why coupon rate < current yield. But just cannot don't understand ...