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 Basic Bond & Bond buying 101, Let's share our knowledge

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Hansel
post Nov 8 2022, 01:54 PM

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" Here I show an example of the 2.4% AAPL bond due on 20230113. "

Bro,... if the coupon rate is 2.5%, I might as well put into DBS USD FD's today which yield me close to 3.6% for 1-mth tenure, interest deposited every mth-end,..

Why go for a 2.4% p.a. return and have capital loss risk too ?
Hansel
post Nov 8 2022, 04:46 PM

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QUOTE(TOS @ Nov 8 2022, 02:10 PM)
Uhm... You should read more about bond pricing...

The yield and actual returns has nothing to do with the coupon. It's the current yield to maturity that matters if you hold it for about 2 months till maturity. The coupon rate is the YTM at the instance of issuance and is a meaningless figure once the bonds are floated. It's only used for identification purposes.

The YTM for the AAPL bond is 4.47% p.a. https://bondfacts.finra.org/AAPL4562449?

If in doubt, use Excel' XIRR to compute the returns.
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I know abt YTMs, and all.

Since you did not put down the price of the AAPL bond in your above input, I presumed it is fixed-price. Hence, I just computed by using the 2.4% indication.

We don't normally call it 'instance of issuance'. We call it PAR VALUE.

Look at my input for the Frasers Green Bond,... it talks abt the current coupon rate at a price which is currently below par value.

I don't like to use the Term : Yield-to-Maturity (YTM). Maturity can be extended dependant on the terms of the bond.

Edit : You shld buy more bonds to take advantage of bond returns in a rising interest rate environment. Use the practical terms outside,... not the book terms from the financial analysts.

This post has been edited by Hansel: Nov 8 2022, 04:48 PM
Hansel
post Nov 8 2022, 05:14 PM

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QUOTE(TOS @ Nov 8 2022, 04:51 PM)
thumbsup.gif

I showed several links earlier in the SSB/T-bills thread. https://forum.lowyat.net/index.php?showtopi...ost&p=105771228
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I saw some solid news today abt China being really keen on opening-up,... I think,... I'll skip T-Bills-lar,...

Standby my money for China-related instruments.

But I'll chase the SSB.

 

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