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24

You're contemplating paying 30,000 lira ($5000 US or 4400 EUR) today for bonds with a face value of 37,500 lira. If Turkey doesn't go bankrupt, in one year the bonds will pay out 37,500 lira. If you had 37,500 lira today, that would be worth $6175 US or 5500 EUR. But you won't have 37,500 lira at today's exchange rate, you'll have it at next year's ...


19

In a lot of situations municipal bond returns are "triple tax free." No federal or state income tax and no AMT (Alternative Minimum Tax -- which is largely irrelevant at this point) liability. This tax preference is considered in the yields investors are willing to accept. Generally, you need to be in the upper most brackets for your real return in muni-...


10

There are none that I am aware of that never drop in value. There are investments that are virtually risk free, like US government bonds, but those are only risk free if you hold them to maturity, meaning you are guaranteed to get your money back plus interest so long as the US government does not default (which is virtually 100% certain). However, even ...


10

If we exclude speculation about future value, there's one rather simple reason to buy such a bond: If you're looking for a safe way to store a lot of money, this is in fact the cheapest option. Let's assume you're a bank with a lot of money that your customers gave you. This money must be stored somewhere. Of course you can lend it to other customers ...


8

Possible reasons I can think of: You are a central bank. Your goal is to inject liquidity into the system by buying bonds, and you don't care about low or even negative returns. Your bond buying program drives yields lower by design. You are a bank who wants to safely park some money, but you are discouraged from depositing more than your reserve ...


8

The question seems to be whether you can benefit from the (normally) higher yield of a longer-term bond but limit your risk by buying it close to maturity. The answer is you cannot, because you have to buy the bond at market price, which is based on the current market interest rate associated with the remaining term. Thus, your yield will be different from ...


8

If you have bonds in your portfolio and a proper process for periodically rebalancing to keep the proportion invested in bonds constant, then that process will automatically mean that you invest during a dip in the market. If equities fall, but the less volatile and to a degree counter-cyclical bonds do not, then the proportion of your portfolio invested in ...


8

Looking at the prospectus for this bond, it is a mandatory convertible bond. The yield is calculated as if you are holding the bond to maturity and getting the full par amount (100,000 EUR per bond). Since the current market price is about 81% of par, that's a return of 23% over 3 months, or 250% annualized. In reality, you're buying a bond that is going ...


8

No, you are not quite correct. Assume you have a simple bond that costs you $100. There are 2 ways the bond provides you money: It might provide you with interest every month/quarter/year, or it might provide you with a future repayment of, say $105. Either way, this bond would be considered 'fixed income' because the value you receive is not based on ...


8

Untangling the passage: Northern Pipe Line Co. was then trading at $65 per share. He learned that Northern Pipe Line Co. held at least $80 per share in high-quality bonds. (That is, the company itself owned assets that, when divided by shares outstanding, had a value of at least $80.) (This implied that the company's stock was undervalued. Even if the ...


7

I don't think rich people will prefer shares(stocks) with dividend or even bonds. Because in both these cases they will need to pay taxes. I think rich people will prefer non dividend paying , high growth stocks with high beta. For middle class should look at asset allocation


6

CIM is not an equity REIT, it is a MORTGAGE REIT (usually abbreviated mREIT). These companies are leveraged to the spread between short and long term interest rates, they borrow at short term rates and invest based on long term rates. When the yield curve inverts (which it just did), then short term bonds pay more interest than longer term bonds (ie 2-year ...


6

Bonds move inversely to their own yields, which are calculated from the bond prices themselves. It sounds circular, but it just means prices and yields are two alternative ways of looking at bonds. A government bond's yield is often considered the market's expectation for the average of short-term rates (as set by the central bank, noted by Mike Scott) over ...


5

For the same reason that some investors buy long-term bonds when the yield curve is inverted but positive: They expect that short-term rates will decline enough to make locking in the current long-term rate a good deal. Negative rates can't be very far below zero, because they compete with holding physical currency. But they can exist because currency does ...


5

Most network marketing revolves around convincing people into believing they own their "own business", when in reality they are a salesman working on pure commission with no set schedule or benefits. Your income is based on whatever amount of products you can sell - usually with a strong emphasis on trying to collect money from your friends and family (using ...


5

You can, but you probably won't make money on it. When you buy a bond, the amount you actually pay is called the dirty price. However, the price quoted for a bond is usually the clean price, which is the dirty price minus the amount of interest which has accrued since the last coupon payment. So, in your example, let's assume that coupons are paid annually,...


5

I think you're taking "fixed income" a bit too literally. They are funds that consist of fixed-income investments. They provide nothing unless you're able to sell for a higher price than you bought, is this correct? When the interest is re-invested, the total value of the fund will increase. So the fund will grow by reinvesting the coupons (all else ...


4

Assuming you bought one $1,000 note, you will get $1,005 at maturity. The $1,000 principal plus the 0.5% (semi-annual 1%) coupon. You paid for roughly 2 months of accrued interest ($5 * 2/6 = 1.67) when you bought the note, and get the full 6 months when it settles, so your net interest will be $3.32. Your net yield is therefore (1005/996.88 ^ 12/4) - 1 = ...


4

You can sell any investment within an IRA/Roth IRA/401K/529 and not have to pay capital gains tax, as long as the money stays within the IRA/Roth IRA/401K/529. You can then purchase another investment as long as it also stays in the IRA/Roth IRA/401K/529. If your provider doesn't have the investment you want, then you will have to roll over the funds into ...


4

The fund NAV is not guaranteed to recover. Suppose the following occurs: An investor invests in a simple treasury bond fund holding bonds with a 2% yield and 2% coupon Yields rise to 4%, fund NAV declines The fund sells the 2% coupon bond for $90 and buys $90 of 5% bonds at $100 Yields stabilize at 5% In this case, the fund's share price could remain ...


4

What is the purpose of bonds within an investment portfolio? https://www.goodfinancialcents.com/bonds-vs-stocks "Investment diversification: Because bonds pay a fixed rate of interest and guarantee principal payment at the end of the term, they’re generally considered safer than stocks, typically held as a diversification to stocks in a well-balanced ...


4

Is there any ETF / Index Fund that tracks the S&P 500 and that holds both stocks and bonds? No, because the S&P 500 does not contain any bonds, so trying to track that index with both stocks and bonds would be extremely difficult. I assume you want the returns of the S&P 500 but not the risk, hence the addition of bonds. Unfortunately, risk ...


4

That issue is the definition of "reinvestment risk". When you get the coupon payment you have to decide what to do with that payment. In periods of falling interest rates you'll have to take on more risk to get a similar rate. In periods of rising interest rates you'll have to decide how much duration risk, etc, you'll want to take to get a similar rate. ...


3

The YTM is an annual rate, but note your effective rate would be better than the 0.53% you calculated because you actually have 107 days from the quote date until maturity instead of 3 months. You can approximate your actual rate of return during those 107 days with the formula 107/365 * 2.122% = 0.622%. But since you're settling 3 days later, the rate is ...


3

In theory it is possible, but generally bond markets are much less liquid and typically have size constraints. I recall trying to sell some treasuries at below the best bid or offer on a bond trading platform and was not getting filled due to the fact my order size was not large enough. Treasuries are supposed to be quite liquid from a bond standpoint. If ...


3

The Turkey overnight bank rate is 24%. That means that a leveraged forex currency position would receive daily rollover interest at about a 23.25% annual-rate after commissions. Of course the forex position doesn't have to use leverage. The one-year bond can be a bet that interest rates will go down because the bond goes up if interest rates go down. ...


3

Exactly how would you keep the money for yourself? In actual, physical cash? That has a non-trivial risk of being stolen. For many private investors, the better option is to keep the money in a bank account. That just costs a small amount in fees. But with the current interest rates, don't expect to receive much if any interest. And this is likely not an ...


3

This depends on whether or not the bond holders think that the company is -- or can be made to be -- a going concern. The company could: renegotiate the loans, go into bankruptcy (liquidation, reorganization, etc) pay the bond holders what cash it has, sell parts of itself to other companies. The major bond holders will be in on this, talking with the ...


3

The chief criterion used for corporate bonds is the Number of times total interest charges have been covered by available earnings for some years in the past. A bond is essentially a loan to a business. The more money the company has available to pay the interest the lower the risk for the lender. If it will take all the earnings to pay the debt, there ...


3

The act of issuing bonds will always increases the debt of the issuer. Debt is the "amount of money borrowed by one party from another" any increase to what is owed always increases the debt, since debt only looks at what is owed, not what is owned. Debt does not consider assets. If we look at a larger picture, an issuer can lower their overall debt by ...


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