New answers tagged bonds
2
votes
Why are these bond portfolio prices equal (case study on 2012 Greek debt restructuring)?
The thing is worth what someone is willing to pay for it. The voluntary nature of the swap means that the investors could instead have sold their holdings elsewhere for a different consideration. ...
- 166k
3
votes
Why doesn't my bond ETF provide a hedge against stock indexes in the way I thought it would?
The concept of using bonds as a hedge against stock market declines is based on observations during periods where interest rates are relatively stable. A common theory is that when the market turns ...
- 3,719
0
votes
Accepted
Why doesn't a bond's dirty price account for all coupon payments?
Doesn't the seller of the bond need to be compensated for those coupons in some way?
The seller of the bond already received the previous coupons. The accrued interest is just the interest that has ...
- 131k
37
votes
Why doesn't my bond ETF provide a hedge against stock indexes in the way I thought it would?
I read an article about this very issue in January 2023, and I saved the graphic that illustrates the historical relationship between the S&P 500 as an indicator for equities and the 10-year U.S. ...
- 1,481
2
votes
Why doesn't my bond ETF provide a hedge against stock indexes in the way I thought it would?
Is the advice I've followed antiquated? Is there any point in holding a bond ETF or mutual fund these days?
Find or create a long term chart of your two securities and eyeball the correlation or lack ...
- 75.8k
10
votes
Why doesn't my bond ETF provide a hedge against stock indexes in the way I thought it would?
For perfectly hedged investments the investments would be perfectly anti-correlated, i.e. if the value of investment A goes down, the value of investment B goes up an equivalent amount, and visa versa....
- 12.6k
3
votes
If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?
Theoretically, this could certainly work. Practically, however, it doesn't.
The bank that originated your loan almost certainly packaged your loan with hundreds of other loans and sold it to an ...
- 26.5k
1
vote
In what cases is it profitable to sell currently-held bonds in favor of buying newly issued bonds?
One reason that you might roll to a higher coupon bond is that it will lower your duration, which is defined as the sensitivity to interest rate changes. Bonds with higher coupons have less ...
- 131k
2
votes
If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?
I think there are two main reasons this doesn't happen.
Firstly, it'd be a lot of admin hassle for them to offer a buyout to individual borrowers. They'd have to deal with any relevant consumer ...
- 27.9k
1
vote
If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?
The bank gave you $100,000 for signing a contract that you pay them $1000 a month for the next 100 months, plus 1/12th of 3 percent of the outstanding loan every month. That contract was worth $100,...
- 22.4k
0
votes
Calculating Bond YTM for different maturities
It depends on if your "present value" is a clean price (without accrued interest) or a dirty price (including accrued interest). The accrued interest is the amount of interest that has ...
- 131k
0
votes
If loans are sold at discount to other lenders, why isn't the same offer given to the debtor for payoff?
If you can afford to buy your own loan, it's usually easy. Just pay off the principal. You'll immediately save all the future interest you would have paid, which is equivalent to getting a discount.
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- 43k
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