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Bonds and Treasuries

A note whereby the investor loans a corporation or government money at a set interest rate over a predetermined time period.

1,619 Questions

What does expected yield mean in savings bonds?

Expected yield in savings bonds refers to the anticipated return on investment over the life of the bond, based on its interest rate and terms. It reflects the total interest earned if the bond is held to maturity, providing investors with an estimate of what they can expect to receive. This yield helps individuals assess the potential growth of their savings and make informed decisions about their investments.

Where do you redeem series e savings bonds?

Where are can i redeem treasury investment growth receipt

What do treasury bills treasury notes and treasury bonds have in common?

They are all debt financing instruments of the U.S. government, backed by the full faith and credit of the U.S. government.

In addition, interest earned on all treasury securities is exempt from taxation by state and local taxing authorities.

What is the stated rate of interest if a bond is sold at 98?

This can't be answered without more information (ie coupon and term/maturity). However, the yield will exceed the coupon rate as the price is less than 100

Why is valuing common stock more difficult than valuing bonds?

Because the future cashflows are more uncertain for a stock than a bond.

Why is a change in required yield for preferred stock likely to have a great impact on price than a change in required yield for bonds?

Bonds have a maturity date while most preferred stocks are perpetual, which means they never mature. No matter the change in interest rates before maturity, bonds will eventually be worth par or 100 when they mature. So interest rate changes may affect the price in the near term but the investor will know what s/he will get at maturity. Since preferred stocks never mature, there is no value in the future that anchors the price of the bond. Therefore, if interest rates go up, the value of the preferred may be permanently impacted by a better interest rate than the stated dividend yield. Thus, the price of the preferred stock will be volatile than that of a bond.

Why issue convertible bonds?

Generally, convertible bonds come at a lower cost to the issuer.

Why is survival a common initial aim of a startup business?

Because it takes so much money to start a business (often tens or hundreds of thousands of dollars) it takes months or years for the company to start making profit. If the company cannot continue to function without making profit for several months (usually when the founder can't afford to continue putting their own money into it) it will fail. After the company starts earning profit it's much easier to keep alive, but it's getting to that profit stage that's the most difficult.

It's vital to make every effort to keep the new business afloat. The Small Business Association publishes figures that indicate the majority of new businesses fail. They offer help to new owners.

Why invest in negative dividend bonds?

Investing in negative dividend bonds can be appealing for several reasons. These bonds may offer higher yields than traditional fixed-income investments, attracting investors seeking income in a low-interest-rate environment. Additionally, they can serve as a hedge against inflation or economic downturns, providing stability in a diversified portfolio. However, investors should carefully assess the associated risks, including potential credit downgrades and the implications of negative dividends on overall returns.