Why Do Commercial Bills Yield Higher Than T-Bills?

June 30, 2024 No Comments

A: Commercial bills are unsecured, short-term debt issued by a corporation, often times for the financing of short-term liabilities and inventory. Meanwhile, a Treasury bill (T-Bill) is short-term debt backed by the U.S. government with a maturity of under one year. Funds raised from selling T-Bills is intended to support

Why Do Companies Issue 100-Year Bonds?

June 30, 2024 No Comments

A: Although it is rare, companies and governments do issue bonds that exceed an average person’s life expectancy. For example, multi-billion dollar companies such as the Walt Disney Company (DIS) and Coca-Cola (KO) have issued 100-year bonds in the past. Many of these bonds and debentures

Why do interest rates have an inverse relationship with bond prices?

June 30, 2024 No Comments

A: At first glance, the inverse relationship between interest rates and bond prices seems somewhat illogical, but upon closer examination, it makes good sense. An easy way to grasp why bond prices move in the opposite direction as interest rates is to consider zero-coupon bonds,

Why do longer term CDs pay a higher rate than the short-term CDs?

June 30, 2024 No Comments

A: To address this question, let’s employ the concept of distance. In the city, a short taxi ride from your hotel to a convention center might cost about $5.00. However, when you depart from your hotel for a ride to the airport located outside the

Where can I find year-to-date (YTD) returns for benchmarks?

June 30, 2024 No Comments

A: Benchmarks are securities or groups of securities against which investment performance is analyzed. Examples of popular equity benchmarks are the S&P 500 index, Dow Jones Industrial Average, Russell 2000 index, Nasdaq Composite, MSCI World Index, FTSE100 and Nikkei 225. Bond indexes are usually created

Where can I get bond market quotes?

June 30, 2024 No Comments

A: Getting bond quotes and general information about a bond issue is considerably more difficult than researching a stock or a mutual fund. A major reason for this is that there is not a lot of individual investor demand for the information; most bond information

Where Does Stock From Convertible Bonds Come From?

June 30, 2024 No Comments

A: Convertible bonds are considered a unique combination of debt and equity. They provide investors with the chance to convert a debt instrument into shares of the issuer’s common stock, at a set price and usually by a set date. This is usually done at the discretion

What is the difference between market risk premium and equity risk premium?

June 30, 2024 No Comments

A: The only meaningful difference between market-risk premium and equity-risk premium is scope. Both terms refer to the same concept and are calculated the same way. Yet the equity-risk premium only refers to stocks, while the market-risk premium refers to all financial instruments. Standard equity-risk

Which asset classes are the most risky?

June 30, 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

What is the difference between term structure and a yield curve?

June 30, 2024 No Comments

A: There is no difference between term structure and a yield curve; the yield curve is simply another name to describe the term structure of interest rates. What Is the Term Structure of Interest Rates? The term structure of interest rates is a graph that

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