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Questions tagged [fixed-income]

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

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Why would people invest in T-Bills over an extended period of time, when more tax-efficient options like BOXX exist?

Assuming a retail investor holds/rolls T-Bills for years, is there any reason for a retail investor to buy T-Bills directly when tax-efficient ETFs like BOXX exist (that provide the same return as T-...
A. Shultz's user avatar
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2 answers
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How to reconcile bond duration with yield responses in Long-Term vs Short-Term bonds?

I'm struggling to reconcile two aspects of bond behavior in response to interest rate changes: Longer-term bonds have higher durations, implying greater sensitivity to interest rate changes, which ...
StatsScared's user avatar
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1 answer
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Is the yield of a 30-year bond, issued 29 years ago and maturing in 1 year, equivalent to that of a 1-year bond maturing on the same date?

The question assumes both bonds are US Treasury bonds. I'm seeking clarity on whether the difference in original issuance date and remaining time to maturity impacts yield parity between these bonds. ...
StatsScared's user avatar
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How to calculate holding period return of a long-short strategy?

I have daily close price of two stocks, A and B. Suppose that we long stock A and short stock B. Assume that we do the long-short every day and hold that portfolio for $4$ days. How to calculate each ...
user546106's user avatar
-1 votes
3 answers
441 views

Can you cancel a fixed-income annuity contract anytime? [closed]

Can you cancel a fixed-income annuity contract anytime? Why or why not?
HelloDarkWorld's user avatar
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2 answers
80 views

Price for a bond that was issued in the past?

I understand that for US treasury bonds, that the price, its current yield and annual coupon is related by price = coupon/yield. But the prices and yields when I look them up online are always denoted ...
Mikkel Rev's user avatar
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1 answer
81 views

What does Takeout and Putup mean?

What does takeout and putup values mean in fixed income trade and how would you interpret these values?
the_brass_bottle's user avatar
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1 answer
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Why payout rates from income annuities largely depend on corporate bond yields?

Why is that payout rates from income annuities largely depend on corporate bond yields? Thanks.
HelloDarkWorld's user avatar
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1 answer
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Why it's best to buy fixed-rate annuities when long-term interest rates are significantly higher than short-term interest rates?

Why it's best to buy fixed-rate annuities when long-term interest rates are significantly higher than short-term interest rates?
HelloDarkWorld's user avatar
0 votes
1 answer
143 views

Why doesn't a bond's dirty price account for all coupon payments?

I've been learning about bonds' dirty prices from this video. The dirty price is the clean price plus any money that has theoretically accumulated since the last coupon payment. I'm wondering why the ...
Enter4343's user avatar
2 votes
1 answer
88 views

In what cases is it profitable to sell currently-held bonds in favor of buying newly issued bonds?

Assuming there is no arbitrage, and say the Federal Reserve hiked rates from, say, 2% to 3%. I am holding a US treasury bond with a YTM of 2% (before the drop in price due to the rate hike). If I am ...
rb612's user avatar
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1 answer
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Why is the price of a 1 year to maturity bond so high?

I am looking at the 2½% Index-linked Treasury Stock 2024 bond and I can't understand why its price is so high (£377). There is only a year left!
Medan's user avatar
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2 votes
2 answers
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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
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1 answer
109 views

bond etf: stock or bond?

I have a question how bond etf works as I can’t understand all the mechanics. When I buy stock, I bet on its price appreciation. I assume higher volatility as it can go up and down but I am free to ...
Medan's user avatar
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5 votes
2 answers
2k views

Financing kids' college with bonds

The rates of treasuries went up in the US. I would like to save for college for my children so I know that in 10 years when they need to pay for college I will have the funds. Could I buy 10 year ...
Medan's user avatar
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1 vote
1 answer
170 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
5 votes
1 answer
233 views

How to determine what would be considered a good rate for 4-52 week Treasury bills?

According to the information provided by treasurydirect.gov, currently the rates for any Treasury bill ranging from 4-52 weeks are all above 4% (expressed yearly). Looking at the 10 year/3month ...
John H.'s user avatar
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3 votes
1 answer
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Possible discrepancy between TreasuryDirect.gov Treasury Bill Investment Rate and Self-Calculated Interest Rate

I bought a 17 week treasury bill ending in Z93 as shown in the screenshot above. I placed 20,000 and after the discount rate, I paid 19707.13 for the treasury bill. According to the screenshot, the ...
John H.'s user avatar
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1 answer
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Calculating difference in "APY" between assets

Treasuries are not taxed at state and local level. Munis are not taxed at any level at times. What formula is used to compare APY between different investment assets, given: CD, Treasuries, Munis at ...
paulj's user avatar
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1 vote
1 answer
159 views

Proper Way To Price a Bond Paying a Semi-Annual Coupon

Let's say you have a 10-year bond with a $100 face value that with a coupon rate of 10%, paid semi annually. The bond is currently price at $105. Which is the proper way of calculating the yield to ...
SwiftySwift's user avatar
2 votes
1 answer
53 views

Comparing bond index funds: how do indexed bond funds assign the weights to their constituent investment components?

How do passively managed indexed bond funds assign the different weights to their constituent investments? Is a bond index fund, similarly to stock indexes, trying to hold a slice of all existing ...
pf_init_js's user avatar
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1 answer
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How to choose between two bond (fixed-income) broad index ETFs in a taxable account?

I want to choose one broad index fixed-income fund ETF for the fixed-income allocation of my portfolio (because I feel one should suffice). I would like to estimate of course, statistically speaking, ...
pf_init_js's user avatar
1 vote
1 answer
35 views

TSE:CHB and US withheld tax

"iShares U.S. High Yield Fixed Income Index ETF (CAD-Hedged)" (TSE:CHB) is listed on the TSX and tracks an index of US high-yield bonds. It holds these bonds directly (i.e. not through a US-...
Isaac's user avatar
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1 vote
1 answer
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When bonds 'rally' what component is rising? Bond prices? Current yields? Nominal yields? Yield-to-Maturity?

As the question says, what should we infer is happening when it's reported that the bond market is surging or rallying? Is the implication that bond prices are increasing? Or is that yields are ...
StatsScared's user avatar
1 vote
1 answer
110 views

Is fixed deposit a good option during COVID days? [duplicate]

In Aug 2020, I left my job and joined 3 years full-time post-grad program. So 1.5 years is already over. Leaving my job during COVID days made me concerned. So I felt I should have significant ...
Rnj's user avatar
  • 131
0 votes
2 answers
164 views

Financial product where the investor makes regular contributions and receives a lump sum

What is the term that describes a financial product where an investor makes fixed regular payments during X years, and in return receives a big lump sum at the end of those X years? This is opposite ...
Flux's user avatar
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3 votes
1 answer
129 views

Ask & Bid yield calculation problem

Does anyone know how the ask and bid yields are calculated on this corporate bond? I tried to use BEY calculation but I keep arriving at different answers. Does anyone know what the $500K means? If ...
Ron Jab's user avatar
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1 vote
0 answers
36 views

BTP Bund spread interpretation

I know that the BTP/Bund spread is the spread between the German and Italian 10 year bonds. But I am unsure how we interpret the actual number and more importantly the drivers behind the spread ...
learningmathematics's user avatar
2 votes
0 answers
78 views

Puerto Rico Tax on Pension Income

I am considering purchasing a permanent residence in PR. I am retired. Based on my 3 sources of income below, what would be taxable in PR? Primary - pension from NYS government not subject to NYS ...
Thomas's user avatar
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11 votes
2 answers
3k views

Do bonds become more valuable right before a coupon payment?

I'm learning about fixed income for the first time and my understanding is that the value of a bond depends on three major variables: The face value The time to maturity The coupon rate a.k.a. the ...
Paul Razvan Berg's user avatar
5 votes
1 answer
951 views

What does TMUBMUSD10Y stand for? (U.S. 10 Year Treasury Note)

MarketWatch, WSJ, and Barrons all list the U.S. 10 Year Treasury Note using the symbol TMUBMUSD10Y. What type of ticker/symbol is this? What does TMUBMUSD10Y stand for?
TJNI4fmgOSiB2yFX's user avatar
3 votes
2 answers
572 views

If a bond index fund's income is re-invested, how can it be a fixed income asset?

Looking at a bond index fund Key Investor Information, I have found this: Income from the Fund will be reinvested and reflected in the price of shares in the Fund I don't fully understand it. As ...
Martel's user avatar
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0 votes
0 answers
136 views

What do bond investors do during a sell-off

Suppose there has been some release of data that shows economic slowdown, or increased expectations of inflation. Investors will then sell their bonds in hope of buying newer bonds with higher ...
Skrrrrrtttt's user avatar
1 vote
1 answer
75 views

Why Can't Some Commercial Bonds Be Bought Through Major Brokers?

I am interested in buying a commercial bond issued by a coal mining company. The CUSIP is 62704PAM5. I searched online at tdameritrade.com and was not able to find the bond using their bond search ...
Lloyd Banks's user avatar
1 vote
0 answers
65 views

To know if I want to hold Municipal Bonds, I want to know the percent of unfunded pension liabilities ($3.8T) to total state and local gov liabilities

I'm pondering whether or not to hold Municipal Bonds in my portfolio. My concern is that Municipalities seem to be stressed because unfunded pension liabilities keep growing and this seems alarming. ...
JorgeT's user avatar
  • 161
1 vote
1 answer
59 views

Why do some mutual funds or indexes have an average effective maturity that is way larger (2-4 times larger) than the average effective duration?

I would like to know if this difference occurs when the coupon payments are very large and/or if there are other reasons.
JorgeT's user avatar
  • 161
2 votes
2 answers
114 views

"Holding the trade" in fixed income arbitrage

From TIPS v Treasuries: What a wild ride it was! Receiving 5% on one US Government Bond and paying 2.5% on another US Government Bond with the same maturity is an obvious winner, but many hedge ...
user avatar
1 vote
1 answer
105 views

Are Muni REVENUE bonds secured or can the local gov. use the revenues for other purposes not paying the bond holders if its going bankrupt?

Municipal bonds are of two kinds: GO (General Obligation) Bonds or Revenue Bonds. My question on Revenue Bonds is: are the revenues from the specific project secured or can the local government use ...
JorgeT's user avatar
  • 161
1 vote
1 answer
114 views

Single period immunization, rebalancing

While reading about Bond portfolio management I came across maturity matching and single period immunization. Which If I understand correctly is if the holding period of a bond is its maturity then ...
Skrrrrrtttt's user avatar
29 votes
8 answers
14k views

What stops you from using fixed income in developing countries? [duplicate]

I was recently visiting a developing country and noticed that their interest rates are very high — ~15% with government bonds promising ~13% annually. I was just thinking, if the bid ask spread for ...
AspiringMat's user avatar
0 votes
1 answer
113 views

Explaining prepayment risk

Regarding MBS I understand that as rates fall people with mortgages will want to refinance and thus mortgage prepayments will increase, causing the life of the MBS to decrease and for the investor to ...
Skrrrrrtttt's user avatar
1 vote
4 answers
293 views

Locking in rates during yield curve inversion

While reading multiple articles about yield curve inversion, a common theme is that investors seeing an economic slowdown in the future which generally means lower interest rates so they want to lock ...
Skrrrrrtttt's user avatar
6 votes
2 answers
486 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. ...
GemStone's user avatar
  • 111
2 votes
1 answer
94 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 ...
Skrrrrrtttt's user avatar
1 vote
2 answers
496 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 ...
curious's user avatar
  • 2,175
0 votes
1 answer
61 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 ...
cph2117's user avatar
  • 253
0 votes
1 answer
86 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 ...
NewInvestor's user avatar
4 votes
2 answers
435 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 Online ...
user avatar
0 votes
1 answer
238 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 ...
Skrrrrrtttt's user avatar
1 vote
1 answer
186 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 ...
Skrrrrrtttt's user avatar