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How does the yield to maturity change over time?
The yield to maturity of a bond generally decreases over time as the bond approaches its maturity date. This is because as the bond gets closer to maturity, the price of the bond tends to increase, which in turn lowers the yield to maturity.
What is a callable?
Callable is the designation of a bond that can be paid off earlier than its maturity date.
In what format are bond quotes stated?
Bond quotes are typically stated in terms of a percentage of the bond's face value, along with the bond's maturity date and coupon rate.
What is cashing a bond at maturity?
Cashing a bond at maturity refers to the process of redeeming the bond for its face value when it reaches its maturity date. At this time, the bondholder receives the principal amount originally invested, along with any final interest payment due. This marks the end of the bond's term, and the investor no longer holds that bond. It is a way for investors to recover their initial investment after the bond's designated period has elapsed.
How to calculate the price of a bond?
The price of a bond can be calculated by adding the present value of its future cash flows, which include the periodic interest payments and the principal repayment at maturity. This calculation takes into account the bond's coupon rate, the market interest rate, and the bond's maturity date.
How does the yield to maturity change over time?
The yield to maturity of a bond generally decreases over time as the bond approaches its maturity date. This is because as the bond gets closer to maturity, the price of the bond tends to increase, which in turn lowers the yield to maturity.
What is repaid to the investor on a bond's maturity date?
The principle and interest.
What is a call date?
A call date is a date on which a callable bond may be redeemed before its maturity.
Yield to maturity vs yield to call?
Yield to maturity assumes that the bond is held up to the maturity date. This is a disadvantage. If the bond is a yield to call , it can be called prior to the maturity date. Thus, the ivestor should sell the callable bond prior to maturity if he expects that he will earn higer return by doing so (in other words when yeild to call is higher than held to maturity).
What is a callable?
Callable is the designation of a bond that can be paid off earlier than its maturity date.
What is the maturity on junk bonds?
Depends on the individual bond. Look for the date on the certificate.
How is a perpetual bond and a no-growth common stock the same?
Neither have a maturity date.
What is the day a bond or other obligation is due to be paid called?
Maturity Date
What is the expiration date of a bond called?
The expiration date of a bond is called its "maturity date." This is the date on which the bond issuer is obligated to repay the principal amount to the bondholder, along with any final interest payments. Bonds can have varying maturity dates, ranging from short-term (a few months to a few years) to long-term (several decades).
What are considered the three main components of a bond?
The three main components of a bond are the face value, coupon rate, and maturity date. The face value, or par value, is the amount the bondholder receives at maturity. The coupon rate is the interest rate paid by the issuer to the bondholder, typically expressed as a percentage of the face value. The maturity date is when the bond's principal is repaid, marking the end of the bond's term.
In what format are bond quotes stated?
Bond quotes are typically stated in terms of a percentage of the bond's face value, along with the bond's maturity date and coupon rate.
What is the difference between a callable bond and a retractable bond?
A callable bond is where the issuer has the ability to redeem the bond prior to maturity. A callable bond is where the bond hold has the ability to force the issuer to redeem the bond before maturity. Hope this helps.
