New answers tagged

2

In the simplest case, let's say I need to pay you $100 in 10 years. If I buy $100 face value of a zero coupon treasury bond maturing in 10 years, I would be able to use the payment from the bond to pay you back. The date I would receive payment from the treasury (maturity) matches the date I owe you. No matter what interest rates do between the time I ...


2

It is a statistical trap. Don't let the yield ratio blind your eye. As many answers already pointed out, the yield ratio is based on the mandatory convertible warrant issuance price. Mandatory convertibles bonds/warrants is a bet on futures and funding the company debt without burdens it with real payout when the bonds/warrant matures. The DE000A189FZ7 ...


7

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 ...


0

Short the stock while holding the bond. If the company is in trouble then the gain on the short stock will be larger than the loss on the long bond. Also, if the company goes bankrupt then the holders of the senior debt mostly become the new stockholders with the previous stockholders usually wiped-out.


0

Going out on a limb here, but if you posit that the market trusts the 30-year bond completely up to and including the penultimate payment, why pay borrowing costs for the short position all that time? Just let it be, then short it at the penultimate payment. Or if you have the capital and are happy with the income stream and the liquidity of the bond up to ...


0

The company won't be instantly liquidated if it goes into bankruptcy. And if it does, then the bonds will not be repaid and therefore they will exist during the bankruptcy until final liquidation. For the non-liquidation scenario (i.e. your assumption was wrong and it's paid at par) you can just settle the short at face value, since the bond has proven to ...


3

The value of a bond has two parts, the interest payments and the final payment (face value). The 200% rate tells you about the ratio between the two, and is not your profit. Since real interests are about 0%, you will have to about 3 times the face value up front. So if you have a face value of 1000 EUR, you'll get 2000 EUR in interest, and you'll pay 3000 ...


1

US Investment-Grade Bonds have averaged about a 5.3% return over the last 10 years, but this year the return has been about 13%, so the YTD numbers you're looking at include a higher-than-average performance period for bonds. I would expect the difference to be a little more pronounced if you look at a longer time period. Even then, a 2025 target fund still ...


0

1) How does the yield change? As D Stanley put it, this is the difference between yield and interest rate. The bond might still be for $1000 at 2% interest rate (a $20 coupon), but it's being sold for a different price than $1000, due to a variety of factors. One big factor is the present interest rate. If now those bonds are being issued at 1.5%, you can ...


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 ...


1

For question 4, the most official source of the US yield curves is here: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield Daily yield curves are posted there each evening, both nominal and real yield curves.


0

Information on the yield curves can be found here: https://fred.stlouisfed.org/categories/33446 My favourite compares the 10Y vs 3M,here: https://fred.stlouisfed.org/series/T10Y3M The 10Y vs 2Y is also a popular indicator, here: https://fred.stlouisfed.org/series/T10Y2Y Zoom out to the maximum data and you'll see when the yield delta has historically gone ...


1

so how can the yield of 30 year bond become lower if the US does not decide to emit a bond with a lower yield? You're confusing yield with interest rate. If you buy a $100 1-year bond that pays 2% interest, you get $102 in one year. What if you paid $102 for that bond? Then you made no profit and your yield is zero. So A lower yield indicates that ...


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 ...


1

Consider a case where the bond offers no yield at all (zero). If the sovereign debt in the negative yield case decreased, it would mean that the zero-yield bond has no effect on sovereign debt at all. That is non true. What stays constant in the zero yield case and decreases in the negative yield case are the interest payments. In the long run, a heap of ...


1

Those astronomical (for bonds) yields indicate very high risk of default, so the shape of the yield curve is (to me) not as interesting as what the prices (not yields) indicate about bankruptcy. Looking at the prices (64% for the front bond, 50% for the longer ones), investors seem to think they're going to get only 50-60% of the principal bank in the next ...


0

The most likely reason for bonds to invert in this way is that he bond rate is predicted to drop a lot, If investors expect that in future the bond rate will drop greatly they may be willing to compromise returns for a long term guaranteed rate. My answer to this question may be helpful for more details, albeit not specifically about this company: Locking ...


1

The coupons from the bonds the ETF holds go into the cash balance of the ETF. From there, it's up to the terms of the ETF whether to pay dividends (which may or may not correspond to the coupons it has received) or to reinvest the coupons internally. In other words, the coupons that the bonds held by the ETF pay are NOT distributed to you directly.


1

The payment of a "normal" MBS tranche don't distinguish between interest and principal - when a mortgage payment is made, the full payment goes to the tranche holders in whatever order the MBS dictates. But prepayments get them their money back sooner than expected, which could be bad if interest rates are lower. For example, if you're holding a tranche ...


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 ...


Top 50 recent answers are included