Search results “Bonds with 100 year maturity”
Relationship between bond prices and interest rates | Finance & Capital Markets | Khan Academy
Why bond prices move inversely to changes in interest rate. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/treasury-bond-prices-and-yields?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-the-yield-curve?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 582442 Khan Academy
Why Bond Prices and Yields are Inversely Related
Help us make better videos: http://www.informedtrades.com/donate Trade stocks and bonds with Scottrade, the broker Simit uses: http://bit.ly/scottrade-IT (see our review: http://bit.ly/scottrade-IT2) KEY POINTS 1. Bond prices and bond yields move in opposite directions. When bond prices go up, that means yields are going down; when bond prices go down, this means yields are going up. Mathematically, this is because yield is equal to: annual coupon payments/price paid for bond A decrease in price is thus a decrease in the denominator of the equation, which in turn results in a larger number. 2. Conceptually, the reason for why a decrease in bond price results in an increase bond yields can be understood through an example. a. Suppose a corporation issues a bond to a bondholder for $100, and with a promise of $5 in coupon payments per year. This bond thus has a yield of 5%. ($5/$100 = 5%) b. Suppose the same corporation then issues additional bonds, also for $100 but this time promising $6 in coupon payments for year -- and thus yielding 6%. No rational investor would choose the old bond; instead, they would all purchase the new bond, because it yielded more and was at the same price. As a result, if a holder of the old bonds needed to sell them, he/she would need to do so at a lower price. For instance, if holder of the old bonds was willing to sell it at $83.33, than any prospective buyer would get a bond that earned $5 in coupon payments on an $83.33 payment -- effectively an annual yield of 6% (5/83.33). The yield to maturity could be even higher, since the bond would give the bondholder $100 upon reaching maturity. 3. The longer the duration of the bonds, the more sensitivity there is to interest rate moves. For instance, if interest rates rise in year 3 of a 30 year bond (meaning there are 27 years left until maturity) the price of the bond would fall more than if interest rates rise in year 3 of a 5 year bond. This is because an interest in interest rates reduces the relative appeal of existing coupon payments, and the more coupon payments that are remaining, the more interest rate fluctuations will impact the price of the bond. 4. Lastly, a small note on jargon: when investors or commentators say, "bonds are up," (or down) they are referring to bond prices. "Bonds are up" thus means bond prices are up and yields are down; conversely, "bonds are down" means bond prices are down and yields are up.
Views: 68765 InformedTrades
FRM: Comparison of spot curve, forward curve and bond yield
A simple comparison using a 2.5 year $100 par 6% semiannual coupon bond. Spot rate: the yield for each cash flow that treats the cash flow as a zero-coupon bond. A coupon-paying bond is a set of zero-coupon bonds. Forward rate: the implied forward rates that make an investor indifferent to rolling over versus investing at spot. Yield to maturity (YTM, an IRR): the single rate that can be used to discount all of the bond's cash flows, in order to price the bond correctly. So the YTM is a flat horizontal line. For more financial risk videos, visit our website! http://www.bionicturtle.com
Views: 50273 Bionic Turtle
How to calculate the bond price and yield to maturity
This video will show you how to calculate the bond price and yield to maturity in a financial calculator. If you need to find the Present value by hand please watch this video :) http://youtu.be/5uAICRPUzsM There are more videos for EXCEL as well Like and subscribe :) Please visit us at http://www.i-hate-math.com Thanks for learning
Views: 316989 I Hate Math Group, Inc
Yield To Maturity - YTM - Bond Example
Example: Suppose you have a risk-free bond that has a face value of $100, a two year maturity, pays a 3 percent coupon with semiannual coupons. The bond is currently trading at $97. What are the stream of cash flows associated with the bond? What is the yield to maturity.
Book Value vs Market Value vs Face Value of Bonds: How to Keep Them Straight
You’ll learn about the book value vs market value vs face value of bonds in this tutorial, and you’ll understand how to calculate and project them in financial models. https://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" Resources: https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Book-Value-vs-Face-Value-Slides.pdf https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Book-Value-vs-Face-Value.xlsx Table of Contents: 3:06 Excel Examples 11:04 Combined Example 14:46 Recap and Summary SHORT ANSWER: Face Value is the amount of Debt that a company issues, pays interest on, and must repay upon maturity. It is affected ONLY by Debt issuances, principal repayments, and Accrued or “Paid-in-Kind” (PIK) Interest. Book Value is the Debt that shows up on a company’s Balance Sheet under Liabilities & Equity, but it is NOT necessarily the amount it pays Interest on or what it must eventually repay. It’s affected by everything above (issuances, repayments, and accrued interest), plus Issuance Fees, any Discount or Premium when the bond is first issued, and the amortization of both those items. Market Value is what someone else would pay to buy the company’s Debt on the secondary market if it trades like that. It’s affected by interest payments, market interest rates on similar Debt, and future repayment upon maturity. In practice, the bond’s coupon rate vs market rates, as well as the credit default risk of the issuer, make the biggest impact. EXCEL EXAMPLES: Toro is spending a lot and must issue additional Debt to fund operations in several years. The Face Value of Debt goes up when new Debt is issued and down when there’s a repayment or maturity. The Book Value of Debt also changes based on these, but we also must deduct the 2% financing fee on new issuances and add the amortization of these financing fees over 10 years. We don’t know enough to determine the Market Value since it depends on current market rates vs the 6.1% coupon rate the company is currently paying. In another example, Atlassian has issued a Convertible Bond that matures in 5 years, if it’s not converted into Equity before then. Convertible Bonds are often separated into Equity and Debt components to reflect their dual nature, and the Book Value here equals the Face Value minus the Unamortized Issuance Fees minus the Debt Discount, which represents the difference in value between a traditional, non-convertible bond with a higher interest rate and the much-lower-rate convertible bond. The Face Value here never changes until the end because there are no additional issuances, there’s no accrued interest, and there’s only the single maturity at the very end. Cash Interest never changes since it’s always based on this constant Face Value and a constant interest rate. The Book Value keeps increasing as the Debt Discount is amortized over time and as the Issuance Fees are also amortized, but it finally reaches $0 at the same time as the Face Value. We don’t know enough to determine the Market Value, as we’d need to know the prevailing market interest rates on similar bonds and Atlassian’s default risk. ONE EXAMPLE TO RULE THEM ALL: Assume that a company issues a $1,000 10-year bond at a 5.00% coupon rate vs prevailing market rates of 6.35% on similar bonds. There are no principal repayments, and the interest is 100% Cash. There is a 2% issuance fee. Due to the below-market rate, the bond is issued at a $100 Discount. The Face Value is $1,000 initially, and it never changes until maturity. The Cash Interest is 5% * $1,000 = $50 per year until maturity. The initial Book Value is the $1,000 Face Value – $100 Discount – $20 Issuance Fee = $880. The Book Value will change according to the amortization of the Discount and the amortization of the Issuance Fees each year. Book Value, Year 1: $880 + $100 / 10 + $20 / 10 = $892 Book Value, Year 2: $892 + $100 / 10 + $20 / 10 = $904 The Market Value is initially the $1,000 Face Value minus the $100 Discount (verify with the PRICE function in Excel), so $900. We don’t know exactly how it will change over time because we don’t know future interest rates, but if rates go up, the Market Value will go down, and if credit default risk goes up, the Market Value will also go down (and vice versa for both of these). Does Book Value vs Market Value vs Face Value for Bonds Matter? In most cases, these distinctions don’t make a huge difference. If you’re under time pressure, you can simplify all this and include only Issuances and Repayments to project Debt. But interview questions on these topics could still come up, and if a company has a Convertible Bond or a normal bond issued at a big discount or premium, the Book Value vs Face Value distinction matters since interest is based on Face Value.
Pricing a risk-free bond based on STRIPS - Example 1
Example: Suppose you have a risk-free bond that has a face value of $100, a two year maturity, pays a 3 percent coupon with semiannual coupons. The current prices of STRIPS (per $1,000 face value) are provided in the table below. What is the price of the bond? Years Price 0.5 $970 1.0 $955 1.5 $935 2.0 $900
Why the 10-Year U.S. Treasury Yield Matters
10-year treasury bond yields are important indicators of the economy as a whole. Treasury bond yields (or rates) are tracked by investors for many reasons. The yields on the bonds are paid by the U.S. government as "interest" for borrowing money (via selling the bond). But what does it mean and how do you find yield information? Why is the ten-year treasury yield so important? The importance of the ten-year treasury bond yield goes beyond just understanding the return on investment for the security. The ten-year is used as a proxy for many other important financial matters, such as mortgage rates. This bond, which is sold at auction by the U.S. government, also tends to signal investor confidence. When confidence is high, the ten-year treasury bond's price drops and yields go higher because investors feel they can find higher returning investments and do not feel they need to play it safe. But when confidence is low, the price goes up as there is more demand for this safe investment and yields fall. This confidence factor can also be explored in non-U.S. countries. Often the price of U.S. government bonds is impacted by the geopolitical situations of other countries with the U.S. being deemed a safe haven, pushing the prices of U.S. government bonds up (as demand increases) and lowering yields. Another factor related to the yield is the time to maturity such that the longer the treasury bond's time to maturity, the higher the rates (or yields) because investors demand to get paid more the longer the investment ties up their money. This is a normal yield curve, which is most common, but at times the curve can be inverted (higher yields at lower maturities). 10-Year Treasury Yields Because the ten-year treasury yields are so closely followed and scrutinized, knowledge of the historical pattern is an integral component of understanding how today's yields fare as compared to historical rates. Below is a chart of the ten-year yields going back ten years. While rates do not have a wide dispersion, any change is considered highly significant and large changes -of 100 basis points- over time can redefine the economic landscape. Perhaps the most relevant aspect is in comparing current rates with historical rates, or following the trend to analyze if the near term rates will rise or fall based on historical patterns. Using the website of the U.S. Treasury itself, investors can easily analyze historical ten-year treasury bond yields. The ten-year treasury is a economic indicator in a sense that its yield tells investors more than the return on investment. While the historical yield range does not appear wide, any basis point movement is a signal to the market.
Bond Pricing, Valuation, Formulas, and Functions in Excel
Premium Course: https://www.teachexcel.com/premium-courses/68/idiot-proof-forms-in-excel?src=youtube Excel Forum: https://www.teachexcel.com/talk/microsoft-office?src=yt Excel Tutorials: https://www.teachexcel.com/src=yt This tutorial will show you how to calculate bond pricing and valuation in excel. This teaches you how to do so through using the NPER() PMT() FV() RATE() and PV() functions and formulas in excel. To follow along with this tutorial and download the spreadsheet used and or to get free excel macros, keyboard shortcuts, and forums, go to: http://www.TeachMsOffice.com
Views: 190976 TeachExcel
Bond Prices - Forward Rates - Holding Period Returns
This video is a supplement to an investments course I teach. In this video I walk through the following problem: Example: Suppose you have a risk-free bond that has a face value of $100, a two year maturity, pays a 3 percent coupon with semiannual coupons. The term structure of interest rates (via STRIPS) are provided in the table below. What is the price of the bond today? What is its YTM? What is the price of the bond in six months? What was your holding period return? Years | APR 0.5 | 2% 1.0 | 6% 1.5 | 8% 2.0 | 10% A pdf of the solution is available here: https://drive.google.com/file/d/0B3xxLxQB8cTzUTZqUXg3bFFIcE0/view?usp=sharing A pdf of the solution to a similar problem is available here: https://drive.google.com/file/d/0B3xxLxQB8cTzUXBQdVpWS0NxdU0/view?usp=sharing -------------------------------------------------------------------------------- General Recommendations for Finance Reading -------------------------------------------------------------------------------- Fundamentals of Investments: http://amzn.to/2r9gCXC The Intelligent Investor: http://amzn.to/2sGY6rt A Random Walk Down Wall Street: http://amzn.to/2r9qX5N
How much is your savings bond worth?
Just because your savings bonds have reached maturity doesn't mean they aren't paying interest; some still have very attractive yields.
Views: 21043 CNN Business
Yield to Maturity Formula - Approximation
In this tutorial, you’ll learn how to approximate the Yield to Maturity (YTM) of a bond, including how you might modify it to cover Yield to Call and Yield to Put as well as real-life scenarios with debt investing. http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" Table of Contents: 1:14 Part 1: The Yield to Maturity (YTM) and What It Means 5:27 Part 2: How to Quickly Approximate YTM 10:19 Part 3: How to Extend the Formula to Yield to Call and Yield to Put 13:32 Part 4: How to Use This Approximation in Real Life 16:27 Recap and Summary Part 1: The Yield to Maturity (YTM) and What It Means Yield to Maturity is the internal rate of return (IRR) from buying the bond at its current market price and holding it to maturity. Assumption #1: You hold the bond until maturity. Assumption #2: The issuer pays all the coupon and principal payments, in full, on the scheduled dates. Assumption #3: You reinvest the coupons at the same rate. Intuition: What’s the *average* annual interest rate % + capital gain or loss % you earn from the bond? You can use the YIELD function to calculate this in Excel: =YIELD(Settlement Date, Maturity Date, Coupon Rate, Bond Price % Par Value Out of the Number 100, 100, Coupon Frequency) For example, if you buy a 5% bond for 96.23% of its par value on December 31, 2014, and hold it until its maturity on December 31, 2024, you could enter: =YIELD(“12/31/2014”, “12/31/2024”, 5%, 96.23, 100.00, 1) = 5.500% You could also project the cash flows from the bond and use the IRR function to calculate YTM, but this will work only for annual periods and annual coupons. Part 2: How to Quickly Approximate YTM Approximate YTM = (Annual Interest + (Par Value – Bond Price) / # Years to Maturity) / (Par Value + Bond Price) / 2 Intuition: Each year, you earn interest PLUS an annualized gain on the bond price if it’s purchased at a discount (or a loss if it’s purchased at a premium). And you earn that amount on the “average” between the initial bond price and the amount you get back upon maturity. For example, on a 10-year $1,000 bond with a price of $900 and coupon of 5%: Annual Interest = 5% * $1,000 = $50 Par Value – Bond Price = $1,000 – $900 = $100 (Par Value + Bond Price) / 2 = ($1,000 + $900) / 2 = $950 Approximate YTM = ($50 + $100 / 10) / $950 = $60 / $950 = ~6.3% There are a few limitations: the approximation doesn’t work as well with big discounts or premiums to par value, nor does it work as well with different settlement and maturity days. It also will not handle floating interest rates since it assumes a fixed coupon. Part 3: How to Extend the Formula to Yield to Call and Yield to Put Call options on bonds let companies redeem a bond early when interest rates have fallen, or its credit rating has improved, meaning it can refinance at a lower rate. Usually, the company has to pay a premium to par value to call the bond early. Put options are the opposite, and let investors force early redemption (usually when interest rates have risen, or the company’s credit rating has fallen). Approximate Yield to Call or Yield to Put = (Annual Interest + (Redemption Price – Bond Price) / # Years to Maturity) / ((Redemption Price + Bond Price) / 2) For example, to calculate the Yield to Call on a 10-year $1,000 bond with a price of $900, coupon of 5%, and a call date 3 years from now at a redemption price of 103: Approximate YTC = ($50 + ($1,030 – $900) / 3) / (($1,030 + $900) / 2) Approximate YTC = ($50 + $43) / $965 = $93 /$965 = ~9.7%, which you can estimate as “just under 10%” Part 4: How to Use This Approximation in Real Life Example: You’re at a credit fund that targets a 10% IRR on investments in high-yield debt. JC Penney has a 4-year 7.950% bond that’s currently trading at 91.75 (as in, 91.75% of par value). This seems like an easy “yes”: you get around 8% interest per year + an 8% discount / 4, and ~10% / average price of 96% results in a yield just above 10%. BUT will a distressed company be able to repay the bond principal upon maturity? What if its financial situation worsens? You estimate that in the best-case scenario, you’ll get 65% of the principal back upon maturity (65% “recovery percentage”). The recovery percentage will be 47% and 13% in more pessimistic cases. Scenario 1 Approximate YTM: (8% – 27% / 4) / 78.5% = 1.6% Scenario 2 Approximate YTM: (8% – 45% / 4) / 69.5% = -4.7% So this is almost certainly a “No Invest” decision if these recovery percentages are accurate – even in the Upside Case, we’re far below 10%. RESOURCES: https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Yield-to-Maturity-Formula-Slides.pdf https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Yield-to-Maturity-Formula.xlsx
The basics of bonds - MoneyWeek Investment Tutorials
In his latest video tutorial, MoneyWeek’s former deputy editor Tim Bennett explains the basics of bonds – what they are and how they work. Visit http://moneyweek.com/youtube for extra videos not found on YouTube. MoneyWeek videos are designed to help you become a better investor, and to give you a better understanding of the markets. They’re aimed at both beginners and more experienced investors. In all our videos we explain things in an easy-to-understand way. Some videos are about important ideas and concepts. Others are about investment stories and themes in the news. The emphasis is on clarity and brevity. We don’t want to waste your time with a 20-minute video that could easily be so much shorter. Related links… -What are derivatives? https://www.youtube.com/watch?v=Wjlw7ZpZVK4 - What are options and covered warrants? https://www.youtube.com/watch?v=3196NpHDyec - What are futures? https://www.youtube.com/watch?v=nwR5b6E0Xo4 - What is a swap? https://www.youtube.com/watch?v=uVq384nqWqg - Why you should avoid structured products https://www.youtube.com/watch?v=Umx5ShOz2oU
Views: 230306 MoneyWeek
Mexico and Its Bond Deal of the Century
https://cnb.com/global-perspectives Another interest rate record was smashed this week when the three-month Euribor – the benchmark interbank lending rate in the eurozone – went negative for the first time. Germany has negative interest rates out to nine years and markets are on watch to see if the critical German 10-year bund moves into negative yield territory. Spain, one of the southern European countries that markets thought might default on its debt just a few years ago, now has short-term debt at negative yields. The quirky negative rate environment is producing bizarre behavior and creating opportunities as well as some chaos. It is clear that if investors in European bonds – and there are a lot of those these days – want to get any meaningful return on their money, they need to go farther out on the yield curve. Interestingly, Mexico offered a unique solution. Earlier this month it issued euro-denominated debt and at a low yield of 4.2%, but with a rare 100-year maturity, also called “century bonds.” Mexico’s €1.5 billion sale of this euro-denominated debt out to March 2115 ensures that it gets funding in the single currency at reasonable rates. This is important for a country like Mexico, which operates in a kind of twilight zone of finance. Mexico is lumped in with all of the other countries noted as “emerging markets” and suffers from a general lack of access to finance for that reason. However, investors are generally united in their opinion that Mexico has well-run finances. Hence, Mexico can secure relatively low rates for an offering as spectacular as a 100-year bond while investors get an interest rate on euros that looks extraordinarily high in comparison to all of those with a negative sign in front of them. It’s attractive to institutional investors in Europe that are tasked with finding investment-grade debt offerings with reasonable yields. Our View: Whether this is a good move or not may not be entirely clear for, well, 100 years. Nevertheless, it is a sign of the times, and a valid effort by Mexico to manage its complex finances.
Views: 69 City National Bank
Bond Pricing on the Term Structure of Interest Rates with Expected Inflation Rate Changes
Consider the following spot interest rates for maturities of one, two, three, and four years. Year | Rate 1 | 4% 2 | 5% 3 | 6% 4 | 7% What is the price of a four year, 4 percent coupon bond with a face value of $100? Assume the bond pays an annual coupon. What are our expectations of the yield for a one year bond that starts in one, two, and three years, i.e., what are the forward rates? Suppose the inflation expectations are a constant 2 percent, what are the expected real interest rates for each one year period in the future? Suppose that immediately after purchasing the bond that market expectations of the inflation rate decrease to a constant one percent. What are our new nominal forward rates? Assume expectations of real interest rates have not changed. In one year, what do we expect the new term structure of interest rates to be? In one year, what do we expect the price of the bond to be based on the new term structure of interest rates? What do we expect the holding period return to be if you sell it immediately after receiving the first year’s coupon? Note: There is a typo in calculating the holding period return. The correct formula is (92.22 - 90.17 + 4)/90.17 = 6.7% Note: A pdf of the solution is available from here: https://goo.gl/MeMDkv
Bonds Explained for Beginners | Bond Trading 101
Earn up to 1 Year Free: https://bit.ly/2oul70h Free Resources: https://bit.ly/2wymZbJ A bond is a type of loan issued to some type of entity such as a business or government by an investor. It’s similar to borrowing money from a lender if you’ve ever purchased a home or car before. Sometimes businesses need more money than the banks will offer them, so they issue bonds as a way to raise more capital. Governments can also issue bonds when they need more money for things like roads or parks. Bonds are considered safer on the risk spectrum for investments, but they also typically carry a lower return. Benjamin Graham, author of the intelligent investor and Warren Buffets mentor, recommends holding a portfolio of 75% stocks and 25% bonds during a bull market and 75% bonds and 25% stocks during a bear market. As opposed to other investments which are considered equity, bonds are considered debt which means that if a company goes under, it must repay all bondholders before stockholders. This is due to the fixed interest nature of the bond. When the investor purchases a bond at what’s called the face value, they are paid interest, known as the coupon or yield. The reason it’s referred to as coupon is because back when bonds were actually paper, investors would physically have to clip coupons to redeem their interest. Anyway, the investor is paid a coupon on the bond until the loan is fully paid back by the issuer. This is known as the maturity date. Interest payment frequency and the maturity date is determined prior to the purchase of the bond. For example, if I purchase a $1,000, 3-year bond with a 5% coupon, I know I’ll receive $50 in interest each year for 3 years. Now it’s important to note that Bonds can vary in risk and return A AAA bond is the best bond you can buy while a Ba bond and lower are more speculative and are known as Junk bonds When it comes to bonds, the higher the return, the higher the risk. The lower the return, the lower the risk. Bonds with a longer maturity date are also riskier and carry a higher return. Typically government bonds will be safer than corporate bonds. When it comes to taxation, corporate bonds are taxed regularly while some bonds like municipal and other government bonds are tax-exempt. A bond can also be secured or unsecured With an unsecured bond, you may lose all of your investment if the company fails while with a secured bond, the company pledges specific assets to give shareholders if they fail to repay their bonds. Although bonds are considered a “safer” investment, they still do come with risks. When you purchase a bond, interest rates are out of your control and may fluctuate. Interest rates are controlled by the U.S. treasury, the federal reserve, and the banking industry. This means that if specified in your agreement, the company may be able to issue a call provision which is an early redemption of the bond. While not always the case, companies will take advantage of lower interest rates to pay back loans early. This leaves you with a lower return than what you expected. Bonds are also inversely proportional to interest rates so when interest rates go up, bonds go down and vice versa. Bonds can also be traded between investors prior to its maturity date. A bond that’s traded below the market value is said to be trading at a discount while a bond trading for more than it’s face value is trading at a premium. Bonds can be a great way to diversify your investment portfolio, however, they can also be quite complex. You can use investment platforms like Fidelity, E-Tade, or Charles Shwabb to learn more about specific types of bonds. For today’s video, we will be using Fidelity. Social Links: Website: http://www.wharmstrong.com Twitter: http://bit.ly/2DBEhdz Facebook: http://bit.ly/2F5uB8a Instagram: https://www.instagram.com/wharmstrong1/ Disclaimer: Nothing published on my channel should be considered personal investment advice. Although I do discuss various types of investments and strategies, I am not a licensed professional. Please invest responsibly. This post contains affiliate links
Views: 8824 Will Armstrong
J.P. Morgan Leads Historic Bond Deal | Oxford University Bond | J.P. Morgan
Learn more about our partnership with Oxford University here: http://bit.ly/YT_JPMOxford Oxford University has enlisted J.P. Morgan to lead the first-ever bond sale in its 850-year history. The university, home to 50 Nobel Prize winners, reached out to the firm for its £750 million debut debt issue. At 100 years, the bond will have the longest maturity of any from a British university and longer than any public issue of U.K. government bonds or gilts. SUBSCRIBE: http://jpm.com/x/i/NFPWfK0 About J.P. Morgan: J.P. Morgan is a leader in financial services, offering solutions to clients in more than 100 countries with one of the most comprehensive global product platforms available. We have been helping our clients to do business and manage their wealth for more than 200 years. Our business has been built upon our core principle of putting our clients' interests first. Connect with J.P. Morgan Online: Visit the J.P. Morgan Website: https://www.jpmorgan.com/ Follow @jpmorgan on Twitter: https://twitter.com/jpmorgan Visit our J.P. Morgan Facebook page: http://facebook.com/jpmorgan Follow J.P. Morgan on LinkedIn: https://linkedin.com/company/j-p-morgan/ Follow @jpmorgan on Instagram: https://instagram.com/jpmorgan/ #jpmorgan J.P. Morgan Leads Historic Bond Deal | Oxford University Bond | J.P. Morgan
Views: 1985 jpmorgan
Investing Basics: Bonds
Bonds are one of the most common investments, but to many investors they’re still a mystery. In this video you’ll learn the basics of bonds and how they might be used by traders looking to preserve capital and pursue extra income.
Views: 216378 TD Ameritrade
Different Types of Bonds | Introduction to Corporate Finance | CPA Exam BEC | CMA Exam | Chp 7 p 4
In this section, we briefly look at bonds issued by governments and also at bonds with unusual features. GOVERNMENT BONDS The biggest borrower in the world—by a wide margin—is everybody’s favorite family member, Uncle Sam. In early 2014, the total debt of the U.S. government was $17.5 trillion, or about $55,000 per citizen (and growing!). When the government wishes to borrow money for more than one year, it sells what are known as Treasury notes and bonds to the public (in fact, it does so every month). Currently, outstanding Treasury notes and bonds have original maturities ranging from 2 to 30 years. Most U.S. Treasury issues are just ordinary coupon bonds. There are two important things to keep in mind, however. First, U.S. Treasury issues, unlike essentially all other bonds, have no default risk because (we hope) the Treasury can always come up with the money to make the payments. Second, Treasury issues are exempt from state income taxes (though not federal income taxes). In other words, the coupons you receive on a Treasury note or bond are taxed only at the federal level. For information on municipal bonds including prices, check out emma.msrb.org. State and local governments also borrow money by selling notes and bonds. Such issues are called municipal notes and bonds, or just “munis.” Unlike Treasury issues, munis have varying degrees of default risk, and, in fact, they are rated much like corporate issues. Also, they are almost always callable. The most intriguing thing about munis is that their coupons are exempt from federal income taxes (though not necessarily state income taxes), which makes them very attractive to high-income, high–tax bracket investors. FLOATING-RATE BONDS The conventional bonds we have talked about in this chapter have fixed-dollar obligations because the coupon rates are set as fixed percentages of the par values. Similarly, the principal amounts are set equal to the par values. Under these circumstances, the coupon payments and principal are completely fixed. OTHER TYPES OF BONDS Many bonds have unusual or exotic features. So-called catastrophe, or cat, bonds provide an interesting example. In August 2013, Northshore Re Limited, a reinsurance company, issued $200 million in cat bonds (reinsurance companies sell insurance to insurance companies). These cat bonds covered hurricanes and earthquakes in the U.S. In the event of one of these triggering events, Northshore Re would receive cash flows to offset its loss. The largest single cat bond issue to date is a series of six bonds sold by Merna Reinsurance in 2007. The six bond issues were to cover various catastrophes the company faced due to its reinsurance of State Farm. The six bonds totaled about $1.2 billion in par value. During 2013, about $7.6 billion in cat bonds were issued, and there was about $20.6 billion par value in cat bonds outstanding at the end of the year. ncome bonds are similar to conventional bonds, except that coupon payments depend on company income. Specifically, coupons are paid to bondholders only if the firm’s income is sufficient. This would appear to be an attractive feature, but income bonds are not very common. A convertible bond can be swapped for a fixed number of shares of stock anytime before maturity at the holder’s option. Convertibles are relatively common, but the number has been decreasing in recent years. A put bond allows the holder to force the issuer to buy back the bond at a stated price. For example, International Paper Co. has bonds outstanding that allow the holder to force International Paper to buy the bonds back at 100 percent of face value if certain “risk” events happen. One such event is a change in credit rating from investment grade to lower than investment grade by Moody’s or S&P. The put feature is therefore just the reverse of the call provision. The reverse convertible is a relatively new type of structured note. One type generally offers a high coupon rate, but the redemption at maturity can be paid in cash at par value or paid in shares of stock. For example, one recent General Motors (GM) reverse convertible had a coupon rate of 16 percent, which is a very high coupon rate in today’s interest rate environment. However, at maturity, if GM’s stock declined sufficiently, bondholders would receive a fixed number of GM shares that were worth less than par value. So, while the income portion of the bond return would be high, the potential loss in par value could easily erode the extra return. Perhaps the most unusual bond (and certainly the most ghoulish) is the “death bond.” Companies such as Stone Street Financial purchase life insurance policies from individuals who are expected to die within the next 10 years.
3 Steps to Easy Bond Investing [Market-Proof Your Portfolio]
Stop missing out on your best opportunity for cash flow and safe returns. Learn the secret to investing in bonds and get started now with Step-by-Step Bond Investing https://amzn.to/2MqKE5d Bond investments are way underrated by investors with less than 2% of investors holding any fixed-income at all in their portfolio. That’s despite the fact that bonds provide rock-solid cash flow and safe returns compared to stocks. In fact, bonds have actually beaten the return on stocks during the last decade. Now I love investing in stocks just as much as the next person and I’m not saying you should ditch equities but bonds is going to be the secret asset you add to your portfolio that helps reach your financial goals. I’m going to walk you through three steps to investing in bonds to protect your money while still producing that return and I’ll show you how to find bonds in which to invest on any online site. I’m then going to share my favorite bond investing strategy, something that will make all this super easy so make sure you stick around to the end of the video. From explaining the basics of bond investing to giving you tips for investing in bonds, this video will give you all the tools to diversifying your portfolio and creating consistent returns even in a bear market. - Why bond investing could be the smartest investment decision you make - Stocks vs Bonds: how bond returns actually beat stocks - What happens to bonds when interest rates rise - 3 Steps to investing in bonds - How to pick bond investments and a fixed-income strategy for consistent cash flow SUBSCRIBE to create the financial future you deserve with videos on beating debt, making more money and making your money work for you. https://peerfinance101.com/FreeMoneyVideos Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps. #investing #stocks #investment
Introduction to bonds | Stocks and bonds | Finance & Capital Markets | Khan Academy
What it means to buy a bond. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-the-yield-curve?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/corporate-debt-versus-traditional-mortgages?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 564879 Khan Academy
Yield to Maturity
Free Online Textbook @ https://businessfinanceessentials.pressbooks.com/ An example of calculating Yield-to-Maturity using the 5-key approach.
Views: 139735 Kevin Bracker
Bond Valuation in Excel
More videos at http://facpub.stjohns.edu/~moyr/videoonyoutube.htm
Views: 13769 Ronald Moy
Pricing a risk-free bond based on STRIPS - Example 2
Example: Suppose you have a risk-free bond that has a face value of $100, a two year maturity, pays a 5 percent coupon with semiannual coupons. The term structure of interest rates (via STRIPS) are provided in the table below. What is the price of the bond? Years APR 0.5 6% 1.0 7% 1.5 8% 2.0 9%
$13 Trillion Dollars Worth of Negative Yielding Bonds Globally Is Just The Beginning?
Jason talks about how last week more bad history was made as Austrian and French 10-year bond yield tipped into negative territory for first time in history on Tuesday. Globally, corporate and government bonds reached $13 trillion US Dollars in value again. This last happened in 2016. #FinancialRepression in Japan and the EU are causing the majority of the negative yielding debt so far. How long before the US joins them? All of the major central banks are now trapped on the #Japanification path. Negative Yields (Corporate & Government Debt) Last Got to $13 Trillion Dollars in Total Value Globally in 2016: 1) With Over $13 Trillion In Negative-Yielding Debt, This Is The Pain A 1% Spike In Rates Would Inflict https://www.zerohedge.com/news/2016-07-10/over-13-trillion-negative-yielding-debt-pain-1-spike-rates-would-inflict 2) "It’s Surreal" - Negative Yielding Debt Rises To Record $13.4 Trillion https://www.zerohedge.com/news/2016-08-15/“it’s-surreal-negative-yielding-debt-rises-record-134-trillion How do negative yields work? Do you actually pay someone to hold your money? Say you buy a German T-bill. Usually, you’d buy at a discount. So, you might pay $99.50 and get back $100 at maturity. But in this case, you would pay $101 and get back $100 at maturity. You literally get back less than you deposited. Articles About the Record Move in Negative Yields in a Single Week Last Week: 1) Global Negative Yielding Debt Soars By $700 Billion In One Day To Record $13 Trillion https://www.zerohedge.com/news/2019-06-21/gloal-negative-yielding-debt-soars-700-billion-one-day-record-13-trillion 2) The World Now Has $13 Trillion of Debt With Below-Zero Yields https://www.bloomberg.com/news/articles/2019-06-21/the-world-now-has-13-trillion-of-debt-with-below-zero-yields 3) Value of debt with negative-yields hits $13 trillion https://www.marketwatch.com/story/value-of-debt-with-negative-yields-nears-12-trillion-2019-06-18 4) $13 Trillion of Bonds Have Below-Zero Yields https://www.treasuryandrisk.com/2019/06/21/13-trillion-of-bonds-have-below-zero-yields Please visit the Wall St for Main St website here: http://www.wallstformainst.com/ Follow Jason Burack on Twitter @JasonEBurack Follow Wall St for Main St on Twitter @WallStforMainSt Commit to tipping us monthly for our hard work creating high level, thought proving content about investing and the economy https://www.patreon.com/wallstformainst Also, please take 5 minutes to leave us a good iTunes review here! We only have about 51 5 star iTunes reviews and we need to get to our goal of 100 5 star iTunes reviews asap! https://itunes.apple.com/us/podcast/wall-street-for-main-street/id506204437 If you feel like donating fiat via Paypal, Bitcoin, Gold Money, or mailing us some physical gold or silver, Wall St for Main St accepts one time donations on our main website. Wall St for Main St is also available for personalized investor education and consulting! Please email us to learn more about it! If you want to reach us, please email us at: [email protected] **DISCLAIMER- ANYTHING MENTIONED DURING THIS AUDIO OR SHORT VIDEO RECORDING IS FOR INFORMATION & EDUCATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE INVESTMENT ADVICE. JASON BURACK AND HIS GUESTS ARE MERELY STATING THEIR OPINIONS ON DIFFERENT TOPICS RELATED TO INVESTING, THE ECONOMY, MARKETS OR COMPANIES. PLEASE TALK TO YOUR INVESTMENT ADVISOR AND DO ADDITIONAL RESEARCH AND DUE DILIGENCE ON YOUR OWN BEFORE INVESTING AND MAKING IMPORTANT INVESTMENT DECISIONS.- DISCLAIMER**
Views: 5195 WallStForMainSt
How to Price/Value Bonds - Formula, Annual, Semi-Annual, Market Value, Accrued Interest
http://www.subjectmoney.com http://www.subjectmoney.com/definitiondisplay.php?word=Bond%20Pricing In this video we show you how to calculate the value or price of a bond. We teach you the present value formula and then use examples to discount the coupon payments and principle payment to their present value. We also show you how to solve the price of a semi-annual bond. In this case you would multiply the periods by two and divide the YTM and coupon payments by 2. We also show you how to solve the accrued interest of a bond to find out what it would sell for at a date that is not on the exact coupon payment date. https://www.youtube.com/user/Subjectmoney https://www.youtube.com/watch?v=7zCqoED8MVk http://www.roofstampa.com hjttp://roofstampa.com http:/www.subjectmoney.com http://www.excelfornoobs.com
Views: 91573 Subjectmoney
9. Yield Curve Arbitrage
Financial Theory (ECON 251) Where can you find the market rates of interest (or equivalently the zero coupon bond prices) for every maturity? This lecture shows how to infer them from the prices of Treasury bonds of every maturity, first using the method of replication, and again using the principle of duality. Treasury bond prices, or at least Treasury bond yields, are published every day in major newspapers. From the zero coupon bond prices one can immediately infer the forward interest rates. Under certain conditions these forward rates can tell us a lot about how traders think the prices of Treasury bonds will evolve in the future. 00:00 - Chapter 1. Defining Yield 09:07 - Chapter 2. Assessing Market Interest Rate from Treasury Bonds 35:46 - Chapter 3. Zero Coupon Bonds and the Principle of Duality 50:31 - Chapter 4. Forward Interest Rate 01:10:05 - Chapter 5. Calculating Prices in the Future and Conclusion Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses This course was recorded in Fall 2009.
Views: 55167 YaleCourses
What is CORPORATE BOND? What does CORPORATE BOND mean? CORPORATE BOND meaning & explanation
What is CORPORATE BOND? What does CORPORATE BOND mean? CORPORATE BOND meaning - CORPORATE BOND definition - CORPORATE BOND explanation. Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license. A corporate bond is a bond issued by a corporation in order to raise financing for a variety of reasons such as to ongoing operations, M&A, or to expand business. The term is usually applied to longer-term debt instruments, with maturity of at least one year. Corporate debt instruments with maturity shorter than one year are referred to as commercial paper. The term "corporate bond" is not strictly defined. Sometimes, the term is used to include all bonds except those issued by governments in their own currencies. In this case governments issuing in other currencies (such as the country of Mexico issuing in US dollars) will be included. The term sometimes also encompasses bonds issued by supranational organizations (such as European Bank for Reconstruction and Development). Strictly speaking, however, it only applies to those issued by corporations. The bonds of local authorities (municipal bonds) are not included. Corporate bonds trade in decentralized, dealer-based, over-the-counter markets. In over-the-counter trading dealers act as intermediaries between buyers and sellers. Corporate bonds are sometimes listed on exchanges (these are called "listed" bonds) and ECNs. However, vast majority of trading volume happens over-the-counter. By far the largest market for corporate bonds is in corporate bonds denominated in US Dollars. US Dollar corporate bond market is the oldest, largest, and most developed. As the term corporate bond is not well defined, the size of the market varies according to who is doing the counting, but it is in the $5 to $6 trillion range. The second largest market is in Euro denominated corporate bonds. Other markets tend to be small by comparison and are usually not well developed, with low trading volumes. Many corporations from other countries issue in either US Dollars or Euros. Foreign corporates issuing bonds in the US Dollar market are called Yankees and their bonds are Yankee bonds. Corporate bonds are divided into two main categories High Grade (also called Investment Grade) and High Yield (also called Non-Investment Grade, Speculative Grade, or Junk Bonds) according to their credit rating. Bonds rated AAA, AA, A, and BBB are High Grade, while bonds rated BB and below are High Yield. This is a significant distinction as High Grade and High Yield bonds are traded by different trading desks and held by different investors. For example, many pension funds and insurance companies are prohibited from holding more than a token amount of High Yield bonds (by internal rules or government regulation). The distinction between High Grade and High Yield is also common to most corporate bond markets. The coupon (i.e. interest payment) is usually taxable for the investor. It is tax deductible for the corporation paying it. For US Dollar corporates, the coupon is almost always semi annual, while Euro denominated corporates pay coupon quarterly. The coupon can be zero. In this case the bond, a zero-coupon bond, is sold at a discount (i.e. a $100 face value bond sold initially for $80). The investor benefits by paying $80, but collecting $100 at maturity. The $20 gain (ignoring time value of money) is in lieu of the regular coupon. However, this is rare for corporate bonds. Some corporate bonds have an embedded call option that allows the issuer to redeem the debt before its maturity date. These are called callable bonds. A less common feature is an embedded put option that allows investors to put the bond back to the issuer before its maturity date. These are called putable bonds. Both of these features are common to the High Yield market. High Grade bonds rarely have embedded options. A straight bond that is neither callable nor putable is called a bullet bond.
Views: 2294 The Audiopedia
FRM: TI BA II+ to compute bond yield (YTM)
Given four inputs (price, term/maturity, coupon rate, and face/par value), we can use the calculator's I/Y to find the bond's yield (yield to maturity). For more financial risk videos, visit our website! http://www.bionicturtle.com
Views: 145237 Bionic Turtle
How to Invest in Bonds for Beginners | Bonds 101
How to invest in bonds for beginners? Welcome to Bonds 101, a comprehensive one video course on bonds that will teach you everything you need to know to get started investing in bonds. Subscribe here for more content: http://bit.ly/SubscribeMichaelJay In this video we will cover the following topics: * What are bonds? * How do bonds work? * Components of a bond * Risks involved with bonds * Who issues bonds? * Different type of bonds * Why invest in bonds? * Which bonds are best for you? * How much should you invest in bonds? * How can you invest in bonds? This video took a while to put together so I hope you get the chance to enjoy it in its entirety! Please let me know if you have any questions or thoughts in the comments and I will get back to you. Thanks for watching! OTHER CONTENT YOU MAY ENJOY BELOW Check out my latest videos: http://bit.ly/NewVideosMichaelJay // Value Stocks I'm Watching Series In this series, we will be focusing on value stocks that appear to offer significant upside for long term investors. https://www.youtube.com/watch?v=xuujRm10u-Q&list=PLNtmr_AnnWdxrbFd9ODrTOn8ie-3hBldP&index=1 // Stock Market News Series In this series, we cover the latest stock market investment news and break down what it means for each stock going forward. https://www.youtube.com/watch?v=n1fiAotdRJQ&list=PLNtmr_AnnWdwgKNdPYAT9Zaeije6766b5&index=1 // #10to10Kchallenge Investment Series Want to grow your investment accounts? Join me as I take the #10to10Kchallenge and grow my Robinhood investment account from $10 to $10,000, build a portfolio of value stocks, and document the entire process for you to see! https://www.youtube.com/watch?v=0hAjDu8NZn4&list=PLNtmr_AnnWdyATMMH5B-MAFWqicUb5zFj&index=1 If you are reading this, join my private investor email list here: https://michaeljay.teachable.com/p/michael-s-private-investor-email-list/ If you join that list you will have access to all the free courses that I am working on, when they are available, as well as significant savings on any advanced courses I make in the future. DISCLAIMER: This video is a resource for educational and general informational purposes and do not constitute actual financial advice. No one should make any investment decision without first consulting his or her own financial advisor and/or conducting his or her own research and due diligence. There is no guarantee or other promise as to any results that may be obtained from using this content. Investing of any kind involves risk and your investments may lose value. CREDITS Transition: DJ Quads - I Like To Soundcloud Link: https://soundcloud.com/AKA-DJ-QUADS Outro: https://soundcloud.com/kevatta/vibin-kevatta-x-saib Saib: https://soundcloud.com/saib_eats Kevatta: https://soundcloud.com/kevatta
Finding Bond Price and YTM on a Financial Calculator
A brief demonstration on calculating the price of a bond and its YTM on a financial calculator
Bond Ratings | Corporate Finance | CPA Exam BEC | CMA Exam | Chp 7 p 3
Firms frequently pay to have their debt rated. The two leading bond-rating firms are Moody’s and Standard & Poor’s (S&P). The debt ratings are an assessment of the creditworthiness of the corporate issuer. The definitions of creditworthiness used by Moody’s and S&P are based on how likely the firm is to default and the protection creditors have in the event of a default. It is important to recognize that bond ratings are concerned only with the possibility of default. Earlier, we discussed interest rate risk, which we defined as the risk of a change in the value of a bond resulting from a change in interest rates. Bond ratings do not address this issue. As a result, the price of a highly rated bond can still be quite volatile. The highest rating a firm’s debt can have is AAA or Aaa, and such debt is judged to be the best quality and to have the lowest degree of risk. For example, the 100-year BellSouth issue we discussed earlier was rated AAA. This rating is not awarded very often: As of 2014, only four nonfinancial U.S. companies had AAA ratings. AA or Aa ratings indicate very good quality debt and are much more common. A large part of corporate borrowing takes the form of low-grade, or “junk,” bonds. If these low-grade corporate bonds are rated at all, they are rated below investment grade by the major rating agencies. Investment-grade bonds are bonds rated at least BBB by S&P or Baa by Moody’s. Rating agencies don’t always agree. To illustrate, some bonds are known as “crossover” or “5B” bonds. The reason is that they are rated triple-B (or Baa) by one rating agency and double-B (or Ba) by another, a “split rating.” For example, in March 2014, real estate investment company Omega Healthcare Investors sold an issue of 10-year notes rated BBB– by S&P and Ba1 by Moody’s. A bond’s credit rating can change as the issuer’s financial strength improves or deteriorates. For example, in January 2014, Moody’s cut the bond rating on PlayStation 4 manufacturer Sony from Baa3 to Ba1, lowering the company’s bond rating from investment grade to junk bond status. Bonds that drop into junk territory like this are called fallen angels. Although sales of the new PS4 were a positive factor noted by Moody’s, the rating agency felt that the majority of Sony’s core business such as TVs, mobile phones, digital cameras, and personal computers faced difficult times ahead. Credit ratings are important because defaults really do occur, and when they do, investors can lose heavily. For example, in 2000, AmeriServe Food Distribution, Inc., which supplied restaurants such as Burger King with everything from burgers to giveaway toys, defaulted on $200 million in junk bonds. After the default, the bonds traded at just 18 cents on the dollar, leaving investors with a loss of more than $160 million. Even worse in AmeriServe’s case, the bonds had been issued only four months earlier, thereby making AmeriServe an NCAA champion. Although that might be a good thing for a college basketball team such as the University of Kentucky Wildcats, in the bond market it means “No Coupon At All,” and it’s not a good thing for investors.
Bond Futures: How to Trade Bond Futures | Bond Futures Trading Strategies tutorial - Jonathan Rose
Let me show the Correct Way to Trade Bond Futures Learn how to Trade Bond Futures. DONT MISS YOUR FREE WEEK https://goo.gl/RXhLnY .This is Bond Futures Trading Strategies tutorial. What is Bond Futures? Although the stock market is the first place in which many people think to invest, the U.S. Treasury bond markets arguably have the greatest impact on the economy and are watched the world over. Unfortunately, just because they are influential, doesn't make them any easier to understand, and they can be downright bewildering to the uninitiated. At the most basic level, a bond is a loan. Just as people obtain a loan from the bank, governments and companies borrow money from citizens in the form of bonds. A bond really is nothing more than a loan issued by you, the investor, to the government or company, the issuer. For the privilege of using your money, the bond issuer pays something extra in the form of interest payments that are made at a predetermined rate and schedule. The interest rate often is referred to as the coupon, and the date on which the issuer must repay the amount borrowed, or face value, is called the maturity date. One wrinkle in the equation, though, is that not all debt is created equal with some issuers being more likely to default on their obligation. As such, credit rating agencies evaluate companies and governments to give them a grade on how likely they are to repay the debt (see "Good, better, best"). Benji Baily and Delmar King, fixed income investment managers at Everence Financial, say ratings generally can be classified as investment grade or junk. "Anything that's considered to be an investment grade, you would have a fairly high probability that you're going to get your money back at maturity," King says. "Of course, the lower you go down the credit spectrum, the more risk there is of default and the possibility that you could have losses. Therefore, the lower the security grade you have, the more yield compensation you should have for taking that default risk." So, if you purchased a 30-year U.S. Treasury bond (currently AA+ from S&P and AAA from Moody's and Fitch) for $100,000 with a coupon rate of 6%, then you could expect to receive $6,000 a year for the duration of the bond and then receive the face value of $100,000 back. At least, that's how a bond would work if you held it to maturity. Rather than hold a bond to maturity, they also can be traded. But, as a bond is traded, interest rates can change, so the overall value of the bond can change. "If you bought a bond that has a 10% coupon and the rest of the market is fine with owning a 1% coupon, then someone is going to love to have that 10% coupon until maturity," Baily says. "Conversely, if you have a 1% bond and everyone else is expecting that the market in general will be at 10%, then you're going to need to pay someone a lot of money to take that 1% bond instead of buying a new 10% bond." Because coupon rates generally are fixed, to adjust for future expectations the price of the bond or note has to move up or down. If yields, the interest or dividends received on a security, go up, the price will fall to accommodate that higher yield; if yields go down, then price has to go up. GRAB YOUR FREE WEEK HERE https://goo.gl/RXhLnY Nayeem Talukder, [15.01.18 06:29] 5 Secret Tips Options Trading: How To Trade Stock Options: https://www.youtube.com/watch?v=-2v-LrBoFWA 5 Secret Tips to Trade Stock Options During Earnings Season - options for beginners https://www.youtube.com/watch?v=awbh33LxYXk How to trade stock options Playlist: https://www.youtube.com/watch?v=awbh33LxYXk&list=PLR_XM0ZsTUySgd3JmlvNv0xosYVz5iAcr SUBSCRIBE FOR STOCK OPTION EDUCATION AND TRADE IDEAS! https://www.youtube.com/channel/UCa5hPmX8-q03fxDYLi9XM7w SUBSCRIBE TO OUR EMAIL LIST http://activedaytrader.com LETS CONNECT http://facebook.com/activedaytrader Email me anytime: [email protected] analysis options for beginners technical analysis options strategies Tending search on youtube: #stockOptions #howtotradestockoptions #tradingStrategies #tradingOptions #BondFutures #BondFuturesStrategies pairs trading jonathan rose
Views: 8305 Jonathan Rose
Worthy Peer Capital // 5% Yield Bonds // Support Small Businesses
I discovered Worthy Peer Capital, which is a platform that allows you to buy 5% yield bonds that help support small businesses. Worthy allows you to buy $10 bonds that pay 5% annual interest. These are paid in monthly payments. This helps you take advantage of compounding by reinvesting back into more bonds. I know I'm typically into dividend stocks, but I believe bonds can be a great way to help diversify your portfolio while still making a nice amount of passive income. Just make sure you're beating inflation! Worthy Referral Link: https://worthy.capital?r=lZFZI #SnarfsPortfolio #WorthyCapital #EarnWithWorthy ********************************** Referral Links: Acorns: https://www.acorns.com/invite/YMR4QJ M1 Finance: https://mbsy.co/nSgrV Dosh: https://link.dosh.cash/SPENCEB17 Bumped: https://bumped.com/ Worthy: https://worthy.capital?r=lZFZI *********************************** https://twitter.com/SpenceBailey1?lang=en https://www.instagram.com/snarfsportfolio/ https://www.instagram.com/thesnarfy/ https://snarfsportfolio.blogspot.com/ [email protected] ***********************************
Views: 398 The World Of Snarf
Premium Prize Bond Rs.40,000 Draw Schedule, Prizes And Attributes
Premium Prize is only available in Rs.40,000 denomination. It is not a bearer instrument rather it is registered on investor name. It can be purchased from SBP 16 field offices or from commercial banks specific branch network which is also given in this video. Premium Prize Bonds can be purchased by providing CNIC and NTN(if any but not necessary) and Account maintenance certificate. No Zakat deductible on Premium Prize Bond but W.H.T is applicable. First Prize on Premium Prize Bond is a Bumper prize of Rs.80 Million. 2nd Prize is of 30 Million and three prizes and 3rd Prize is Rs.500,000 and 660 Prizes. Premium Prize bond can be pledged like a security and can be taken loan against with it. Bi annual profit of 3% is given on Premium Prize bond. Both Profit and Prize money to be added in Bank account directly. Premium Prize Bond can be transferred to another name it means you can sale it by visiting SBP branch and transfer it to whom you are selling. Lucky draw is scheduled four times a year.
Views: 999 Mr Banker
What is Fixed Maturity Plans? Essel group troubles Kotak & HDFC Mutual Funds, Current Affairs 2019
Download the Poket News App - http://bit.ly/2J3IxV3 #StudyIQ Pendrive Courses for Various Govt. Exams, Click here http://bit.ly/2QcdLOd to know in detail OR Call 95-8004-8004 UPSC/CSE - This is our Flagship & Most Selling Course. This course covered Length & Breadth of UPSC vast syllabus and made by Elite & Very best faculties from all over India with StudyIQ Trust. Click here http://bit.ly/2QbHfM7 to watch Demo Videos, Course Content, Authors, Etc. SSC & Bank - This is our oldest Course, made by Founders of StudyIQ. 1000+ videos so far and new videos added every week. Click here http://bit.ly/2QaG3ZE to know more. UPSC Optionals - We have covered almost all major UPSC Optionals. Click here http://bit.ly/2QqTKUU to find yours State Exams PSCs - Currently we have 18 States covered, More to come, Choose your state. Click http://bit.ly/2Qgv6G0 to watch demo videos, know about authors and all. Defense Exams - CDS, NDA, CAPF, SSB, AFCAT, Airforce. Click here http://bit.ly/2zT8MbP to get into the Army, Navy or Airforce SSC JE Exams - Civil, Mechanical, Electrical, Electronics. Click here http://bit.ly/2G8eDQ0 to know more RBI Grade B - Grade B is the most popular Job after IAS. This course made by well-experienced faculties of Study IQ. Click here http://bit.ly/2DAtlwm to watch demo videos, Authors, Course content. NTA NET - Start your preparation for UGC(NTA) NET prestigious exam. We have courses for both Paper 1 & 2. Click here http://bit.ly/2HnhFNQ to check UPSC Prelim Test Series - Our flagship test series for UPSC Prelims. More than 60% Sucess rate in 2018. Click here http://bit.ly/2Ea4Rtx to enroll right now DMRC Exams - Courses for Delhi Metro Technical & Non-Technical Exams. Click here http://bit.ly/2Q4cFS8 to know more Insurance Exams - LIC, NICL, and other insurance exams. Click here http://bit.ly/2VpbXjE to know more Law Exams - Find courses for Undergraduate and Judiciary Exams. Click here http://bit.ly/2Jk4G31 to check Railway Jobs - More than 1.5 Lac jobs to come this year. Start your preparation with us for Tech or Non-Tech posts. Click here http://bit.ly/2Ti5NB6 to check the available courses Teaching Jobs - CTET, DSSSB. Click here http://bit.ly/30oBgWP to know more NABARD Grade A - https://goo.gl/C6CzAL Have a doubt? Click here http://bit.ly/2qWhdOI to start instant Chat with our Sale team or you can #Call_9580048004 _ Download the Poket News App - http://bit.ly/2J3IxV3 Follow us on Instagram - http://bit.ly/2K0uXEH Click here http://bit.ly/2V5GN0h to Sponsor Study IQ UPSCIQ Magazine - http://bit.ly/2DH1ZWq || Bank IQ Magazine - http://bit.ly/2QxyNmJ Daily Current Affairs - http://bit.ly/2VDIuT0 Download All Videos PDFs - https://goo.gl/X8UMwF || Join StudyIQ on Telegram - https://goo.gl/xBR3g8 Monthly Current Affairs - http://bit.ly/2UAXktE Topic Wise Current Affairs - http://bit.ly/2VHxiZw Free PDFs - https://goo.gl/cJufZc || Free Quiz - https://goo.gl/wCxZsy || Free Video Courses - https://goo.gl/jtMKP9" Follow us on Facebook - https://goo.gl/iAhPDJ Telegram - https://t.me/Studyiqeducation The Hindu Editorial Analysis - https://goo.gl/vmvHjG Current Affairs by Dr Gaurav Garg - https://goo.gl/bqfkXe UPSC/IAS Burning Issues analysis- https://goo.gl/2NG7vP World History for UPSC - https://goo.gl/J7DLXv Indian History - https://goo.gl/kVwB79 Follow us on Facebook - https://goo.gl/iAhPDJ Follow Dr Gaurav Garg on Facebook - https://goo.gl/xqLaQm UPSC/IAS past papers questions - https://goo.gl/F5gyWH SSC CGL + IBPS Quantitative tricks - https://goo.gl/C6d9n8 English Vocabulary - https://goo.gl/G9e04H Reasoning tricks for Bank PO + SSC CGL- https://goo.gl/a68WRN Error spotting / Sentence correction https://goo.gl/6RbdjC Static GK complete- https://goo.gl/kB0uAo Complete GK + Current Affairs for all exams- https://goo.gl/MKEoLy World History - UPSC / IAS - https://goo.gl/kwU9jC Learn English for SSC CGL, Bank PO https://goo.gl/MoL2it Science and Technology for UPSC/IAS - https://goo.gl/Jm4h8j Philosophy for UPSC/IAS - https://goo.gl/FH9p3n Yojana Magazine analysis -https://goo.gl/8oK1gy History for SSC CGL + Railways NTPC - https://goo.gl/7939eV
Views: 4706 Study IQ education
$100,000 in saving bonds found by man cleaning house
$100,000 in saving bonds found by man cleaning house
(this is an old video) How to Double your Money[1/9] - NSC/ National Savings Certificate
In our journey to investments, we meet people who suggest ponzi schemes to double our money overnight. Many of us fall into their trap and thus suffer the consequences. However, there are few fixed income investment schemes backed by Government of India which gives fixed returns on investment. The National Savings Certificate (NSC) is one such popular and secure way to tax savings with guaranteed double returns. There is no maximum limit on the purchase of NSCs, while the minimum limit is Rs.100. The investment in NSC is locked-in for its tenure. The maturity is set for 5 or 10 years for these certificates. Watch our video to get in-depth knowledge about investment in NSC. Learn about safe investment options in India. Watch our series and learn how to double your money: http://bit.ly/how-to-double-your-money
Views: 68192 B Wealthy
What is Treasury Note ?
A treasury note is a U.S. government debt security that offers a fixed interest rate and a maturity date that ranges between one and 10 years. The government sells treasury notes to help fund its debt. They’re issued at a $1,000 par value, and T-notes pay interest twice a year. They’re redeemed for full face value at maturity, and income from T-notes is only taxed at the federal level. Since they’re backed by the full faith and credit of the U.S. government, they’re considered very safe investments. Of course, that safety typically means the interest rates T-notes offer are low compared to corporate bonds or other securities. They’re vulnerable to inflation, as well. Average investors typically buy T-notes through a secondary market that provides liquidity and boosts their popularity. For example, Jane, a private investor, buys a 2-year T-note online at auction from the government. A year later, Jane sells that same T-note to a bank. Registered brokers and dealers regularly buy T-notes and then sell them to investors or among themselves. Secondary market prices for T-notes vary. T-notes can be bought with a competitive or noncompetitive bid. In a competitive bid, the buyer specifies the desired yield. A noncompetitive bid accepts whatever yield is determined at auction. Read more: Copyright © Investopedia.com
Views: 5565 Xargo
SBI PPF Account 2019 Hindi ( Public Provident Fund PPF in SBI )
Public Provident Fund Best Saving Scheme In India. NOTE :- SBI PPF में 50 हजार रूपए प्रति वर्ष जमा करने पर 15 वर्षो में Return बनता हे 14.16 लाख 7.6% * इंटरेस्ट रेट के हिसाब से (As Per Financial Calculator ) ( PPF Scheme में Rate of Interest Govt. के द्वारा बढ़ाया या घटाया जा सकता हे ) Hello Friends In This video we will show you SBI PPF Account Full Detail With Terms and condition and what is the benefits of sbi ppf scheme Friends First of All what is PPF account PPF account full form is Public Provident Fund PPF account can be open in SBI, Post Office , HDFC Bank and some more nationalized Banks with simple KYC Documents SBI PPF account is one of the best saving scheme in India. One can invest in PPF Account by minimum 500 Rs and Maximum 150000/- Rs in one financial year In one month SBI PPF allowed two deposit transaction and in one financial year ppf scheme allow 12 Deposit transaction Locking period of sbi ppf plan is 15 Year, No withdrawal allow before 15 year* One more important benefit of SBI PPF or Posit office PPF account is Tax Benefit One can take tax benefit in this ppf plan under section 80( C )and at the time of maturity there is no tax deduction Means maturity amount is fully tax free Loan Facility is also available after 3 year in sbi public provident fund scheme . PPF Plan 2018 can be taken on minors name also this scheme is allow for minor and major both. Presently Rate of interest is 7.8% which revised in every 3 Month There is compound interest Benefit is also in this plan SBI PPF Account will give you very good saving and Returns without any risk Thanks
Views: 5324964 Online Support Raj
What Are Treasury Bonds
Treasury bonds fidelity investments. Treasury bond prices and yields (video) australian government bondsaustralian bonds. Treasury bills notes and bonds definition, how to buy the balance. United states treasury security wikipedia. Treasury bonds make interest payments semi annually, and the income received is only taxed at federal level. Treasury securities? Investing in bonds. T bonds are issued with long term (maturity over 10 years) fixed interest rate debt security by a national (federal) government backed its 'full faith and credit. Individual treasury bonds rates & terms direct. Investors receive the face amount of bond at maturity treasury bonds ('t bonds') are long term, semiannual issued by u. Coupon interest payments are made every six months. Bonds and securities treasury. Treasury bonds are issued in a term of 30 years and offered multiples $100 4 apr 2017 treasury bills, notes fixed income securities by the u. You also can buy them through a bank or broker. We no longer sell bonds in legacy treasury direct, 13 jul 2015 rates & terms. The money paid out for a treasury bond is essentially bonds. What are the differences between a treasury bond and what bonds? Definition & rates video lesson definition example is (t bond)? meaning u. Treasury securities and how they work treasury bonds what are, work, to buy them. There's no such thing as a risk free investment, but if there was it'd be treasury bonds. Treasury bonds are defined as u. What is a treasury bond (t bond)? Youtube. Treasury bonds pay a fixed rate of interest each year. Stheir differences, how to buy them, and their the u. Treasury security, you are lending can buy treasury bonds from us in treasurydirect. Treasury securities such as bills, notes and bonds are debt obligations of the u. Treasury bonds cbk central bank of kenya. Sinvestors in treasury notes (which have shorter term maturities, from 1 to 10 years) and bonds maturities of up 30 receive interest payments, known 8 mar 2015treasury are a secure, medium long investment that typically offer you payments every six months throughout the bond's maturity 16 nov 2016 information dealing with purchase, redemption, replacement, forms, valuation savings securities is located on may 2011. Treasury bonds, notes and bills differ in the lengths of time they are issued manner which definition. The four types of debt are treasury bills 31 mar 2015 the federal government offers three categories fixed income securities to buying public bonds (t bonds), notes notes) and bills). Federal government suspended issuing 30 year treasury bonds for four years from february 18, 2002 to 9, treasuries are debt obligations issued and backed by the full faith credit of u. Treasury bond (t bond) investopedia. Next to treasury bills (maturity less than one year), and notes ten years) t bonds are the safest form of marketable investment u. Government debt security with a maturity of more than 10 years. Interest is paid semi annually and taxed only
Views: 105 new sparky
Deceuninck celebrates bond listing at Euronext Brussels
Baron PierreAlain de Smedt, Chairman of Deceuninck, opens the European stock markets with a Bell Ceremony at Euronext Brussels to celebrate the listing of the bonds issued Deceuninck for an amount of 100 million euros, with maturity of 7 years. The coupon amounts to 3.75% gross per year. KBC acted as general coordinator in this transaction.
Views: 222 Euronext TV
The Effect of Interest Rates on The Treasury Yield
Let us help you become the smartest investor in the room. Sign up by clicking the link below and get our 100% free E-book now: http://www.fearlesswealth.com/a-better-choice-yt/ Don't Miss Weekly Updates from RC! Click Here to Subscribe: https://www.youtube.com/channel/UCpeNTBaLA3xmrKSl7f0tWTA ===================================== It is Independence Day this week and I wanted to talk about how a lot of what independence is about is thinking for yourself, point out things you know that are not right. Sometimes this means you have to be on your own or at least with a small group that is going up against something large. And if you’ve been following me, you know that I’m a firm believe that the long only Big Box approach worked great in the 80’s and 90’s, but just hasn’t been working since 1999. Below you will find seven charts of different treasury yields. Each chart goes back to 1982. In each chart there will be a red dot – where the stock market peaked in 2000 and 2007. And a green dot – where the stock market bottomed after those two recessions. You’ll notice some interesting similarities in all of the 7 treasury yields charts. Also the Fed has less and less control over treasury yields the further and further out you go. So in our examples below the Fed has the most control over the 3 month yield and the least over the 30 year yield. The first chart below is of the 3 month treasury yield. You can see when the peak in yields happens in the early 1980s. Remember that The Feds are the ones that control this yield. The red dots are when the stock market peaked in 2000 and 2007. Notice how much yields fell during those times. In the 2000 Dot Com recession yields full from around 6% to eventually 1%. Similarly in the 2008 recession yields fell from about 5% all the way to 0%. In both recessions the yields fell 5%. So what do you think will happen to this yield when we have our next recession? If we have a recession right now and the Fed drops the yield 5% we’d have a -4% yield on the 3 month treasury. The next chart below is the 6 month treasury yield. You probably notice right away that the two charts look very similar. During each recession shown on the chart the yields drop about 5%. The biggest difference between the two charts are when rates started rising. You can see that the 6 month treasury yield began rising about two years before the 3 month yield. This is because the Fed has less of a reach on the 6 month yield. The point of showing you these charts is that the yield has a lot higher to go before we get into the next recession. It also can show you how absurd the behavior of the Fed has been considering the flatness of the line. This next price chart is of the 1 year treasury yield. Again you can see that the yield peaked right around the same time that the stock market peaked. But right after the stock market bottomed in 2002 the 1 year yield still continued to fall right after. You can see the similarities between the three charts. After each recession the yields dropped about 5%. Notice how steep this yield increases when the stock market goes up. Something that people forget is that yields historically move in the direction that stocks do. The next chart is the 2 year treasury. Again very similar. When the Dot Com recession happened the yield fell 6% and then during the 2008 Global Financial Crisis 5%. As you move further out on the yield curve the Fed has less control over it. This is interesting because after the yield bottomed in 2011, it has been steadily increasing on its own. The Fed didn’t start raising interest rates until December 2015. But the two year treasury which is controlled more by the public and the market, started moving up way before the Fed started moving their interest rates up.
Views: 1584 Fearless Wealth
Realized Compound Return (bonds) - What is the definition and formula? - Finance Dictionary
http://www.subjectmoney.com Realized Compound Return - The realized compound return is the rate of return that one would earn if all coupon payments were reinvested. Example Let's assume that we purchased a bond for $900 that has exactly 3 years until maturity. This bond has a face value of $1000 and annual coupon payments of $100. We will be receiving our first coupon payment one year from today. Now let's assume that the reinvestment rate is different than the coupon rate. Let's assume that the reinvestment rate it 9%. Ok so we already know that we are receiving $1000 in a final payment for the bond and we know that we spent $900 for this bond. Now we need to figure out how much we will receive from reinvesting our payments at 9% for the next 3 years. We will then add that amount to the $1000 payment of the face value to find out what our total realized return will be 3 years from now. First let's find out what our payments will be worth if reinvested at 9% 100(1.09^2) + 100(1.09) + 100 = $327.81 If we reinvest our coupon payments at 9% then they will be worth $327.81 3 years from today at maturity. We know we will also be receiving the payment for the face value of $1000 at maturity so 3 years from today our investment will be worth the face value plus the reinvestment of the coupon payments. $1000 + $327.81 = $1327.81. Remember that we paid $900 for this bond so we just need to figure out the rate of return that $900 is earning to be worth $1327.81 3 years from today. $900(1+ r)^3 = $1327.81 The best way to calculate this would be to use your financial calculator. N=3 I/Y = ? PV= ($900) PMT = 0 FV= $1327.81 Now you would just compute the I/Y to get your Realized Compound Return Realized Compound Return = 13.84% Reinvestment Rate Risk Reinvestment rate risk is the uncertainty surrounding the reinvestment rate of the coupon payments. If rates were to rise then the market value of the bond would lose value however the reinvestment rate that the coupon payments could earn would go up, so there is a tradeoff. If rates were to drop then the market value of the bond would go up but the rate at which the coupons could be reinvested would go up. https://www.youtube.com/user/Subjectmoney https://www.youtube.com/watch?v=AS_5_VLGmxo
Views: 17022 Subjectmoney
Issuance of Bonds Journal Entry - Lesson 2
Continuing from the 5-step journal entry for bond issuance, from the issuer’s point of view, Roger Philipp, CPA, CGMA, explains in the video, 11.03 - Issuance of Bonds Journal Entry – Lesson 2, how to calculate the bond carrying value, also known as amortized cost. Amortized cost is the face amount of the bond, net of either the premium or discount. Remember to exclude from the bond carrying amount any accrued interest or bond issue costs (BIC), both of which may be found in the journal entry at issuance. Please note that if the issuance involved BIC or accrued interest, cash proceeds from the bond issue will not equal the initial carrying value of the bond. Roger goes on to explain the difference between ‘recording’ and ‘reporting’ bonds – a key distinction for the CPA Exam, where bonds tend to get heavily tested. Lastly, Roger sets the stage for the upcoming in-depth review of the effective interest method for amortizing bond discounts and premiums. Connect with us: Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Now, when we talk about the carrying value of the bonds, what is the carrying value of the bonds? It is going to be the face of the bonds, net of either premium, or net of discount. That is called the carrying value of the bonds. It is also known as your "amortized cost." Remember earlier, we had bonds payable was a million, and I said the discount was 100, so this net of this is what, 900. What do we do every year? This gets smaller, carrying value gets bigger bigger, bigger, bigger up to a million bucks. What if it's a premium, then this would be the million, the premium would be the hundred, this would be the carrying value or amortized cost, a million one, gets smaller, smaller, smaller to a million.
Views: 6300 Roger CPA Review
Bond Ladder Series Part 3 Building a Bond Ladder
The 3rd and final part of my series on bond ladders. In this part, Building a Bond Ladder, I show how to build a 5 year ladder with 5 rungs (bonds). I also show how to calculate interest payments, how to use the spreadsheet I created to manage a ladder and how to replace a bond that has matured. BTW, the spreadsheet is available on the Retirement Journeys home page under resources and downloads.
Views: 1685 Retire Hoppy
Bond Equivalent Yield - Example 2
Example: Suppose that a T-bill has a face value of $100 and will be paid in 90 days. If the interest rate, quoted on a bond equivalent yield basis, is 3 percent, what is the the price of the bond? (Assume that it is not a leap year.)
Rising Interest Rates Bad for Bonds - Everything Investments
Interest Rates Bad for Bonds - Everything Investments Sign up for our newsletter today http://eepurl.com/ES-x5 Find out more about this at our website http://www.everythinginvestments.com When interest rates go up, bond prices fall. The reason for this is because income investors looking to loan money out, wonʼt buy a lower rate bond, if they can purchase one today for a higher rate. The opposite is true for when interest rates fall, this causes investors to pay a higher price for bonds issued out with higher rates, so when interest rates fall, bonds rise in value. Lets use an example, lets say the U.S. Treasury is issuing out bonds at 2% today, this means that for every $100 invested, you are receiving $2 per year until the date of maturity. However if rates rise to 4%, your bond could fall in value 50%, why? Because in order for a new investor to receive the same 4% maturity he will get from a new bond issued, he will need to purchase your bond for $50, giving him $2 a year in interest which is 4% return. It is important to understand this only effects bond traders, if you hold any bond to maturity, assuming the borrow doesnʼt default, you will receive your entire principal plus interest. So as long as you hold a bond to maturity, you wonʼt lose money. However this