28
votes
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If US Treasuries at yielding 4-5% right now, why can't I find an ETF that yields that amount?
Over the last 12 months, SGOV yielded 1.84%, but the current SEC yield (30 days ending on the last day of last month) is 4.41%. If you want to know what a fund or ETF yielded most recently, look at ...
- 5,868
24
votes
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If Turkey doesn't go bankrupt, is there any chance they won't pay bonds profits?
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 ...
- 6,758
22
votes
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What's up with banks closing down their high yield savings accounts and incentives lately?
Generally high yield savings accounts are used by banks to increase the deposit base. The banks are required to keep a certain ratio of loans outstanding to deposits in the bank, and paying high ...
- 161k
17
votes
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Why would I buy a bond with a negative yield?
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 ...
- 286
13
votes
Why don’t broker-dealers borrow against their clients’ stock holdings instead of lending them?
Pause on the issue with 'having security for a loan' for a moment [it seems to be clouding the economic reality of what you are presenting]. Your plan is for a bank to lend your hypothetical broker ...
- 41.5k
12
votes
If US Treasuries at yielding 4-5% right now, why can't I find an ETF that yields that amount?
The average yield to maturity of SGOV is 4.41%. The 2% is the 12-month trailing yield. From https://www.ishares.com/us/products/314116/ishares-0-3-month-treasury-bond-etf:
Note that the average yield ...
- 11.2k
11
votes
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Thorough Description of Yield to Maturity?
What is a bond price? A bond is an asset, and like any tradeable asset it has a price. If I hold $10K face value of a certain GM bond, then I would be willing to sell it at some price, which may be ...
- 15k
9
votes
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Why is there a sell off of US bonds if interest rates in the US are currently rising?
Bond prices and interest rates have an inverse relationship. When rates increase, bond price declines, and vice versa.
Suppose you bought a bond with a rate of 4%. At a later date, interest rates ...
- 75.7k
8
votes
Why don’t broker-dealers borrow against their clients’ stock holdings instead of lending them?
They don't own the stock
The first big thing is that they are prohibited to do so, they are required by SEC custody rules to keep the stock under a qualified custodian unencumbered. E.g. 17 CFR § 240....
- 3,353
7
votes
Why would I buy a bond with a negative yield?
It would be preferable to purchase a bond with a negative yield if the negative yield was the smallest compared to similar financial securities.
The purchase or sale of a security is rarely a ...
- 701
7
votes
Why don’t broker-dealers borrow against their clients’ stock holdings instead of lending them?
I think you are asking about earning a small spread between an overnight borrowing rate and a longer (but still short-term) Treasury bill rate. That small spread, if it exists, is only a fair ...
- 29.4k
7
votes
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Is the US market really expecting less than 3% yearly inflation over the next 5 years?
The overall answer to your question is: yes, current market prices imply an expected inflation rate over the next 5 years of around 2.67%.
Having said that, the market for TIPS is significantly less ...
- 96
5
votes
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Confirm Dividend Yield
Is my math correct?
The Math is correct, however Dividends don't work this way. The Yield is Post Facto. i.e. Given the dividend that is declared every quarter, once calculates the yield. The ...
- 57k
5
votes
Accepted
Need help with the concept of yield in a fund
You have the formula for dividend yield of a mutual fund correct. It is the annual dividend payment divided by the value of the mutual fund.
This metric is just a snapshot of what the mutual fund is ...
- 115k
5
votes
Why don't investors in negative-yielding government bonds put money in positive-yielding government bonds instead?
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-...
- 29.4k
4
votes
How to read bond yield quotes? What do the time, coupon, price, yield, and time mean?
The first thing that it is important to note here is that the examples you have given are not individual bond prices. This is what is called the "generic" bond price data, in effect a idealised bond ...
- 6,380
4
votes
How to calculate new price for bond if yield increases
The duration of a bond tells you the sensitivity of its price to its yield. There are various ways of defining it (see here for example), and it would have been preferable to have a more precise ...
- 161
4
votes
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How to calculate new price for bond if yield increases
I am currently trying out some variations (moving terms around ...) of the formula for the present value of money
The relationship between yield and price is much simpler than that.
If you pay £1015 ...
- 3,131
4
votes
Why would I buy a bond with a negative yield?
Perhaps something else comes with the bond so it is a convertible security. Buffett's Negative-Interest Issues Sell Well from 2002 would be an example from more than a decade ago:
Warren E. Buffett'...
- 10.1k
4
votes
Does a mutual fund's return include fees?
Generally the sales load are amortized over a period of time. The upfront sales load is taken out of the investment value. Hence quite a few Mutual funds the real return is not fully known unless one ...
- 57k
4
votes
Accepted
When to buy and sell bonds
Why does selling a bond drive up the yield?
The bond will pay back a fixed amount when it comes due. The yield is a comparison of what you pay for the bond and what will be repaid when it matures (...
- 32.7k
4
votes
Accepted
Why bonds with lower coupon rates have higher interest rate risk?
The key concept here is called Yield To Maturity (YTM). This is the yield that bond has when held until its redemption date. It is calculated from the coupon and the price the bond trades at today. (...
- 3,997
4
votes
What are the downsides to high-interest savings accounts?
The main reason people go with lower interest accounts is for convenience of having the money in the same institution with other accounts (like checking, auto loans, credit cards, etc.) with their ...
- 32.7k
4
votes
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What determines the interest rates of government bonds?
I can imagine there are people selling on the secondary market at given interest rates, therefore the rate changes on the basis of those trades.
No - the rate for a given bond is fixed, and is set by ...
- 129k
4
votes
Why are long term bonds subjected to a higher volatility, as well as higher yield than short term bonds?
The longer the time horizon, the greater the risk and the higher the volatility. There are many more dire economic and events that can occur in 10 years rather than 2 years. Specifically Interest ...
- 881
4
votes
Accepted
What is the correct formula for Bond Yield?
The 3.30% yield mentioned in the example is the yield to maturity (YTM), not the current yield. Unlike the current yield, the yield to maturity takes into account the $25.20 income (1000 - 974.80) ...
- 16.9k
4
votes
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Treasury Yields -- Quoted on an Investment Basis vs. Discount Basis
The convention for US treasury bills is discount yield. Constant maturity series (CMS) are not actual treasury yields but a computed construct that has always a set maturity (1 year for example). ...
- 2,390
4
votes
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Understanding Implications of Return of Capital?
Return of capital is a (generally) non-taxable distribution of original principal. ROC is often part of fund/ETF distributions when there's a goal of a steady income stream. In your example, there ...
- 5,868
3
votes
What are the downsides to high-interest savings accounts?
Without the details of a specific bank it's hard to give a definitive answer, but here are some potential valid reasons I can think of:
Desire to use a savings account in the same bank that your ...
- 129k
3
votes
Yield curves and Bonds
I'm going to paraphrase your questions.
(1) Please explain what the yield curve tells us and how it is quoted
There are a lot of people out there constructing yield curves. I guess any curve that ...
- 15k
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