Which factors most influence fixed income securities?

June 30, 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

What is the difference between yield to maturity and the coupon rate?

June 30, 2024 No Comments

A: A bond’s coupon rate is the actual amount of interest income earned on the bond each year based on its face value. A bond’s yield to maturity (YTM) is the estimated rate of return based on the assumption that it will be held until

What is the difference between yield to maturity and the spot rate?

June 30, 2024 No Comments

A: Bonds are marketable and relatively liquid securities, and there are several different accounting methods for discounting their values to give investors a sense of their present worth. The most common of these is called yield to maturity, or YTM, which represents the expected rate

What is the difference between yield to maturity and the yield to call?

June 30, 2024 No Comments

A: To make appropriate decisions in bond investing, it is important to understand the concept of the yield calculations that bonds receive. As an important aspect of investing basics, bond yields are the rate of return you receive after purchasing a bond and are the

What economic factors influence corporate bond yields?

June 30, 2024 No Comments

A: The economic factors that influence corporate bond yields are interest rates, inflation, the yield curve and economic growth. All of these factors affect corporate bond yields and exert influence on each other. The pricing of corporate bond yields is a multivariable, dynamic process in

What happens to the shares of a company that has been liquidated?

June 30, 2024 No Comments

A: The fate of a liquidating company’s shares depends on the type of liquidation the company is undergoing. The most common type of liquidation is bankruptcy, of which there are two types. In a Chapter 11 bankruptcy proceeding, the shares of a company may continue

What is a basis point (BPS)?

June 30, 2024 No Comments

A: Basis points, otherwise known as bps or “bips,” are a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal

What is a stripped bond?

June 30, 2024 No Comments

A: The quick answer to this question is that a stripped bond is a bond that has had its main components broken up into a zero-coupon bond and a series of coupons. To help explain one, let’s first describe a bond. A bond is a

What Is a Triple Tax-Free Municipal Bond?

June 30, 2024 No Comments

A: At its core, a triple tax-free municipal bond is just like any corporate bond — it is a debt instrument, a loan given to a government authority or municipality in order to help it meet certain financial objectives or complete projects in the community. As with

What are the pros and cons of operating on a balanced-budget?

June 30, 2024 No Comments

A: Few issues are more complicated, contentious and controversial in contemporary American politics than balancing the federal government’s budget. Those who argue in favor of a balanced budget offer many claims about the deleterious impacts of huge federal debt. Others counter that balanced budgets would

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