How do open market operations (OMOs) affect bond prices?

July 8, 2024 No Comments

A: Open market operations (OMOs) directly influence the money supply, which in turn impacts interest rates. Interest rates are negatively correlated with bond prices due to opportunity cost. Thus, central banks can indirectly affect bond prices through the purchase or sale of debt securities on

How Are Savings Bonds Taxed?

July 8, 2024 No Comments

A: According to Treasury Direct, interest from EE U.S. savings bonds is taxed at the federal level but not at the state or local levels for income. This interest is also taxed through federal and state estate, gift and excise taxes. The interest is the amount that a bond can

How are the Equity Market and Fixed-Income Market Different?

July 8, 2024 No Comments

A: The major differences between equity and fixed income markets are the way they make profits for investors, the manner in which they are traded, their representation of financial interest and their levels of risk. Equity Markets Equity markets involve the purchase and sales of

How are treasury bills (T-bills) taxed?

July 8, 2024 No Comments

A: Interest earned on all U.S. Treasury securities, including treasury bills, is exempt from taxation at the state and local level but is fully taxable at the federal level. At the end of each year, owners of treasury bills should be sent a 1099-INT form

How can bond yield influence the stock market?

July 8, 2024 No Comments

A: Bond yields influence the stock market in different ways at different times. Investors and traders need to be aware of economic and market conditions to understand the constantly evolving relationship between bond yields and the stock market. Changes in the Economy When the economy

How can I calculate the carrying value of a bond?

July 8, 2024 No Comments

A: The carrying value of a bond is the net amount between the bond’s face value and any un-amortized premiums or minus any amortized discounts. The carrying value is also commonly referred to as the carrying amount or the book value of the bond. Because

How Can I Check If an Old Railroad Bond Has Value?

July 8, 2024 No Comments

A: Finding out whether an old railroad bond from 1938 still has any value is a tough question to answer. The short answer is that it will require a person to do some homework or spend money on a search service. Getting Started With Your Research The first step

How can I create a yield curve in Excel?

July 8, 2024 No Comments

A: You can create a yield curve in Microsoft Excel if you are given the time to maturities of bonds and their respective yields to maturity. The yield curve depicts the term structures of interest rates for bonds and the term structures could be normal,

How do I calculate a discount rate over time, using Excel?

July 8, 2024 No Comments

A: The discount rate is the interest rate used when calculating the net present value (NPV) of something. NPV is a core component of corporate budgeting and is a comprehensive way to calculate whether a proposed project will add value or not. For this article, when we look at the discount

How do I calculate the expected return of my portfolio in Excel?

July 8, 2024 No Comments

A: The expected return of your portfolio can be calculated using Microsoft Excel if you know the expected return rates of all the investments in the portfolio. Using the total value of your portfolio, the value of each individual investment, and its respective return rate,

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