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I see a few questionable things: Compared to an equivalent bond without a call, it will be priced the same. Adding a call option reduces the value of the bond since it provides optionality to the issuer (adds risk to the buyer). A callable bond would have to be sold at a deep discount (have very little chance of being called) to be priced the same as the ...


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Bonds are currently high in price but there are some predictions of them going higher. An economic slowdow could send bonds higher but that's also assuming that inflation declines. With an increasing government deficit, it would be possible, as in the future, to have both slow growth and high inflation. That's stagflation. If worried about a loss on bonds ...


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Survivorship bias applies to hypothetical (backtested) portfolios, not real ones. An ETF (or mutual fund) reports the return attributable to its holdings (stocks or bonds) while it held them. A bond ETF holding "A" bonds may buy a bond recently upgraded from "B", but any price jump associated with the upgrade is already reflected in the purchase price and ...


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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 ...


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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 ...


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In general, it’s a benchmark short-term interest rate set by that country’s central bank (or to be more precise, the central bank for the currency in which the bonds are denominated). The name and exact details will be different for different countries. In the UK, for example, it’s the official bank rate set by the Bank of England.


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