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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 is the relationship between interest rates and bond prices?
There is an inverse relationship between price and yield: when interest rates are rising, bond prices are falling, and vice versa. The easiest way to understand this is to think logically about an investment. You buy a bond for $100 that pays a certain interest rate (coupon). Interest rates (coupons) go up. That same bond, to pay then-current rates, would have to cost less: maybe you would pay $90 the same bonds if rates go up. Ignoring discount factors, here is a simplified example, a 1-year bond. Let's say you bought a 1-year bond when the 1-year interest rate was 4.00%. The bond's principal (amount you pay, and will receive back at maturity) is $100. The coupon (interest) you will receive is 4.00% * $100 = $4.00. Today: You Pay $100.00 Year 1: You receive $4.00 Year 1 (Maturity): You Receive $100 Interest Rate = $4.00 / $100.00 = 4.00% Now, today, assume the 1-year interest rate is 4.25%. Would you still pay $100 for a bond that pays 4.00%? No. You could buy a new 1-year bond for $100 and get 4.25%. So, to pay 4.25% on a bond that was originally issued with a 4.00% coupon, you would need to pay less. How much less? Today: You Pay X Year 1: You Receive $4.00 Year 1 (Maturity): You Receive $100 The interest you receive + the difference between the redemption price ($100) and the initial price paid (X) should give you 4.25%: [ ($100 - X) + $4.00 ] / X = 4.25% $104 - X = 4.25% * X $104 = 4.25% * X + X $104 = X (4.25% + 1) $104 / (1.0425) = X X = $99.76 So, to get a 4.25% yield, you would pay $99.75 for a bond with a 4.00% coupon. In addition to the fact that bond prices and yields are inversely related, there are also several other bond pricing relationships: * An increase in bond's yield to maturity results in a smaller price decline than the price gain associated with a decrease of equal magnitude in yield. This phenomenon is called convexity. * Prices of long term bonds tend to be more sensitive to interest rate changes than prices of short term bonds. * For coupon bonds, as maturity increases, the sensitivity of bond prices to changes in yields increases at a decreasing rate. * Interest rate risk is inversely related to the bond's coupon rate. (Prices of high coupon bonds are less sensitive to changes in interest rates than prices of low coupon bonds. Zero coupon bonds are the most sensitive.) * The sensitivity of a bond's price to a change in yield is inversely related to the yield at maturity at which the bond is now selling.
What is the monthly cost for a 12000 surety bond?
In regards to purchasing a surety bond to replace a lost stock certificate, usually 2% of the face value of the certificate in question. I.E. if the shares are worth $30,000, a surety bond would cost $600.
How does the yield to maturity on a bond differ from the coupon yield or current yield?
The rate of return anticipated on a bond if held until the end of its lifetime. YTM is considered a long-term bond yield expressed as an annual rate. The YTM calculation takes into account the bond's current market price, par value, coupon interest rate and time to maturity. It is also assumed that all coupon payments are reinvested at the same rate as the bond's current yield. YTM is a complex but accurate calculation of a bond's return that helps investors compare bonds with different maturities and coupons.
What arethe three types of depository institutions in Ethiopia?
1. Bank industries
2.Insurance companies
3.Micro finance institutions
What is the social and cultural impact globalization on Ethiopia society?
Globalization has had a social and cultural impact on Ethiopian society because women are being used in roles that are no longer considered traditional. Also importation has grown in Ethiopia, opening up new opportunities for citizens.
What is Pakistan investment bonds?
Pakistan investment bonds are issued by State Bank of Pakistan on behalf of Federal Government of Pakistan. Pakistan investment bonds are only long term debt securities and they benchmark for long term tenure debt and they are risk free. Inter bank transfer of PIB's are possible. The tenure of the PIB could be
3 Years
5 Years
10 Years
15 Years
20 Years
30 Years
Well, we don't actually know yet. But if Daniel Craig wants to leave, a popular and rumoured choice for the role is Sam Worthington from Avatar and Terminator Salvation. I personally think that he is very suited to the part. :)
What is the name of the character in the James Bond films who supplies James Bond with the gadgets?
Swaine Adeney Brigg, the UK manufacturer of luxury leather goods, made (and still make) James Bond's briefcase from "On Her Majesty's Secret Service."
The original James Bond attache case concealed Krugerrands, flat-throwing knives and an automatic rifle. The same attache case can be bought from Swaine Adeney Brigg's London store at 54, St James's Street just off Green Park or via their website www.swaineadeney.co.uk Although it is made of the same fine black leather with red skivver lining, it comes without weapons.
The price of 007's briefcase is around £1450 (without gold coins!)
Penfold Golf make James Bond's golf ball of choice - the Penfold Heart. "Mine's the Penfold Heart!" exclaims 007 when defeating Bond villain, Auric Goldfinger in the most famous golf match played on the silver screen. Sales of Penfold Hearts soared after Sean Connery played a Penfold Heart in the Bond movie Goldfinger and James Bond's golf ball became a major selling 007 gadget. Penfold Golf ran into trouble in the 90s and it wasn't until the company was reformed that the Penfold Heart reappeared on the golfing scene in August 2008.
James Bond's golf ball is back in action - just 500 collector's sets of 12-dozen Penfold Hearts have been produced to commemorate the Ian Fleming Centenary 2008. Selling for £50 a set, Bond fans can once again buy 007's golfing weapon of choice via www.penfoldgolf.com - several James Bond websites have been running competitions to win the sets and Penfold Golf offers the chance to win a set on its own website.
Thomas Jefferson didn't want to pay the speculators at the full value because they basically made everyone else poor. Speculators generally lived in the north, so that would focus all the power and prestige in the north. Thomas Jefferson opposed this viewpoint as he was from the south. Alexander Hamilton was the man who came up with the plan.
I know this because I have to write a huge essay on it right now. I'm actually procrastinating. Hope this helps.
How was Hamilton's views on bonds different from those of Thomas Jefferson?
it's not really a song but people can still use it
The conflict that took shape in the 1790s between the Federalists and the Anti-federalists exercised a profound impact on American history. The Federalists, led by Alexander Hamilton, who had married into the wealthy Schuyler family, represented the urban mercantile interests of the seaports; the Anti-federalists, led by Thomas Jefferson, spoke for the rural and southern interests. The debate between the two concerned the power of the central government versus that of the states, with the Federalists favoring the former and the Anti-federalists advocating states' rights.
Hamilton sought a strong central government acting in the interests of commerce and industry. He brought to public life a love of efficiency, order and organization. In response to the call of the House of Representatives for a plan for the "adequate support of public credit," he laid down and supported principles not only of the public economy, but of effective government.
Hamilton pointed out that America must have credit for industrial development, commercial activity and the operations of government. It must also have the complete faith and support of the people. There were many who wished to repudiate the national debt or pay only part of it. Hamilton, however insisted upon full payment and also upon a plan by which the federal government took over the unpaid debts of the states incurred during the Revolution.
Hamilton also devised a Bank of the United States, with the right to establish branches in different parts of the country. He sponsored a national mint, and argued in favor of tariffs, using a version of an "infant industry" argument: that temporary protection of new firms can help foster the development of competitive national industries. These measures -- placing the credit of the federal government on a firm foundation and giving it all the revenues it needed -- encouraged commerce and industry, and created a solid phalanx of businessmen who stood firmly behind the national government.
Jefferson advocated a decentralized agrarian republic. He recognized the value of a strong central government in foreign relations, but he did not want it strong in other respects. Hamilton's great aim was more efficient organization, whereas Jefferson once said "I am not a friend to a very energetic government." Hamilton feared anarchy and thought in terms of order; Jefferson feared tyranny and thought in terms of freedom.
The United States needed both influences. It was the country's good fortune that it had both men and could, in time, fuse and reconcile their philosophies. One clash between them, which occurred shortly after Jefferson took office as secretary of state, led to a new and profoundly important interpretation of the Constitution. When Hamilton introduced his bill to establish a national bank, Jefferson objected. Speaking for those who believed in states' rights, Jefferson argued that the Constitution expressly enumerates all the powers belonging to the federal government and reserves all other powers to the states. Nowhere was it empowered to set up a bank.
Hamilton contended that because of the mass of necessary detail, a vast body of powers had to be implied by general clauses, and one of these authorized Congress to "make all laws which shall be necessary and proper" for carrying out other powers specifically granted. The Constitution authorized the national government to levy and collect taxes, pay debts and borrow money. A national bank would materially help in performing these functions efficiently. Congress, therefore, was entitled, under its implied powers, to create such a bank. Washington and the Congress accepted Hamilton's view -- and an important precedent for an expansive interpretation of the federal government's authority
What best explains why the money supply increased when the fed buys treasury bonds?
When the Fed buys Treasury bonds, it increases the amount of deposits in people's bank accounts.
The purchase of bonds increases the amount of deposits in people's bank accounts, which enables banks to loan more money
The Federal Reserve's procedure of purchasing or selling government bonds is an example of?
open-market operations
What happens to treasury bond rates if the Fed buys a lot of them?
This (Federal Open Market Operation) is one kind of monetary policy adopted by Federal Reserve to increase the money supply in the economy. By purchasing the securities Federal Reserve make more money available to the public thereby increasing the liquidity in the market and hence consumer spending. Actually this method helps to boost the economy during economic downturns.
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Why does bond price decrease when yield to maturity increases?
If you buy a bond with say a 4% coupon at par when bonds of that maturity and quality are paying 4% and then market rates for that maturity and quality bond rise to say 5%, the price of your bond must drop so that the yield to the buyer equals the current market rate of 5%.
Is interest on debentures included in estimating factor income?
yes interest on debentures is to be included in national income, this is as debentures are used fro production purposes and hence income received due to it is a part of factor income
Which country borrows the most money from the rest of the world?
Countries get into debt because they don't have a system to go by or their system doesn't work. They could also go into debt by not selling enough goods that they bring in. The economy could fall by people using credit cards and not paying the money back.when there is depression in the country and government wants to overcome it by entering into recovery stage of business cycle then for this purpose it will need finance so it will accept foreign grants and aids from IMF, WORLD BANK etc.
Are market interest rates and bond prices are related?
They are inversely realtes, i.e, when one goes up, the other one comes down.
What is meant by non convertible debentures?
A debenture is basically an unsecured loan to a corporation. Often there is a provision to exchange this debt for corporate stock. Non-convertible debentures do not have this provision.
Non Convertible Debentures are relatively safer than stocks. In case the company winds up, claims of NCD holders will be superior to those holding other unsecured assets of the company such as stocks etc. In fact NCDs can be considered to be safer than Company Fixed Deposits as well.
How can you lower the inflation rate?
Invest your money. Passbook savings accounts are not a good hedge against inflation. Buy something when the price is low, and hope for the best, or put your money into a money market account. In order to do that, you first have to accumulate money. For many people, the best way to start is with a savings account to which they make regular deposits.
If you can deposit $50 every two weeks for a year, you will have sufficient funds to invest in a broad range of much better investment tools.
Well,There Is`nt Really A Way To Stop Recession You Kind Of Have To Play Along. But We Are Now Officially Out Of Recession. But To Save Money You Must Limit Yourself On Buying Stuff And Don`t Use As Much Of Your Phone And Energy To Save Money On Your Bills. You Can Also Put Budgets On How Much You Can Spend When Going Shopping.
When inflation becomes a problem what action will fed likely take with regard to interest rates?
when inflation becomes a problem the action the fed will RAISE INTEREST to slow the economy down a little.
Corporate, municipal or government bonds can easily be purchased by opening a brokerage account with a bank or other financial institution.
The fees for purchasing individual bonds are usually modest but since there are many thousands of different bond issues available, many investors prefer to purchase bond mutual funds.
The risk of loss due to a bond default is greatly reduced by purchasing a bond mutual fund since the fund will normally hold a wide variety of different bonds.
U.S. government bonds can be purchased directly and without fees by opening an account directly with the U.S. Treasury.
What is Euro Convertible Bond?
A convertible bond is a bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder. An Euro convertible bond is a bond issued by a company in a market other than its country of operation. Certain countries do not permit issue of ECBs by its companies since till the time of conversion the amount will add to the external debt of the country.
