Why is my bond worth less than face value?

July 7, 2024 No Comments

There are two primary reasons a bond might be worth less than its listed face value. A savings bond, for example, is sold at a discount to its face value and steadily appreciates in price as the bond approaches its maturity date. Upon maturity, the

Which asset classes are the most risky?

July 7, 2024 No Comments

Equities is the riskiest class of assets. Dividends aside, they offer no guarantees, and investors’ money is subject to the successes and failures of private businesses in a fiercely competitive marketplace. After equities, real estate subjects its investors to the most risk. The meltdown of

Which Creditors Are Paid First in a Liquidation?

July 7, 2024 No Comments

A: Liquidation is the process of ending a business and distributing its assets to claimants. It often occurs when a company is insolvent, meaning it cannot pay its obligations when they come due. In Section 507 of the Bankruptcy Code, it states that when a corporation is liquidated,

Which economic factors impact treasury yields?

July 7, 2024 No Comments

A: The economic factors that impact Treasury yields are interest rates, inflation and economic growth. All of these factors influence each other as well. Treasury yields are basically the rate investors are charging the U.S. Treasury for borrowing money. These rates differ over different durations,

Which factors most influence fixed income securities?

July 7, 2024 No Comments

A: The main factors that impact the prices of fixed income securities include interest rate changes, default or credit risk, and secondary market liquidity risk. Fixed income securities are loans made by an investor to a government or corporate borrower. The issuer of the bond

Which investments have the highest historical returns?

July 7, 2024 No Comments

A: Historically, investments in the stock market have experienced the greatest return. They have performed better than all other types of investments in the long run, but have a tendency to fluctuate from time to time. Analysts have found that stocks have held their position

Who Are the Key Players in the Bond Market?

July 7, 2024 No Comments

A: The bond market is for participants that are involved in the issuance and trading of debt securities. It primarily includes government-issued and corporate debt securities, and can essentially be broken down into three main groups: issuers, underwriters and purchasers. Bond Issuers The issuers sell bonds or other debt instruments

Who facilitates buying and selling on the primary market?

July 7, 2024 No Comments

A: There are several important actors that facilitate buying and selling on the primary market, the home of initial public offerings (IPOs) and new bond floats. Private financial institutions create the new security issues that are sold on the primary market; without them, there would

Why are most bonds traded on the secondary market “over the counter”?

July 7, 2024 No Comments

A: Like stocks, after issuance in the primary market, bonds are traded between investors in the secondary market. However, unlike stocks, most bonds are not traded in the secondary market via exchanges. Rather, bonds are traded over the counter (OTC). There are several reasons why

Why companies issue debt and bond?

July 7, 2024 No Comments

A: Companies issue bonds to finance operations. Most companies can borrow from banks, but view direct borrowing from a bank as more restrictive and expensive than selling debt on the open market through a bond issue. The costs involved in borrowing money directly from a

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