A high-yield corporate bond is a form of corporate bond with a higher interest rate due to a higher risk of default. As a result, they frequently issue bonds with higher interest rates to attract investors and compensate them for the increased risk. Why are corporate bonds yielding more than Treasury bonds? Interest rate yields […]

Bonds are one way for businesses to raise funds. A bond is a type of debt between an investor and a company. The investor agrees to contribute the firm a specified amount of money for a specific period of time in exchange for a given amount of money. In exchange, the investor receives interest payments

Despite the higher costs for issuers and the higher risk for investors, these bonds can be quite appealing to both parties. They are popular among investors because they offer a higher-than-average rate of return, at least until the bonds are called away. Callable bonds, on the other hand, are appealing to issuers because they allow

A zero-coupon bond does not pay interest on a regular basis, but instead sells at a substantial discount and pays the full face value at maturity. Zero-coupon bonds are appropriate for long-term, specific financial needs that can be met in the near future. Despite their higher returns, “zeroes” are more volatile than ordinary bonds and

Convertible bonds are corporate bonds that can be exchanged for the issuing company’s common stock. Convertible bonds are issued by companies to cut debt coupon rates and defer dilution. The conversion ratio of a bond decides how many shares an investor will receive in exchange for it. Companies can force bond conversion if the stock

Bonds are one way for businesses to raise funds. A bond is a type of debt between an investor and a company. The investor agrees to contribute the firm a specified amount of money for a specific period of time in exchange for a given amount of money. In exchange, the investor receives interest payments

Companies buyback shares for a variety of reasons, including firm consolidation, increased equity value, and to appear more financially appealing. The disadvantage of buybacks is that they are frequently financed with debt, putting a burden on cash flow. Is it possible for a firm to repurchase its bonds? As a technique of raising capital, a

Finally, the Federal Reserve can influence the money supply by conducting open market operations, which has an impact on the federal funds rate. The Fed buys and sells government securities on the open market in open operations. The Fed purchases government bonds to enhance the money supply. This increases the overall money supply by providing

Finally, the Federal Reserve can influence the money supply by conducting open market operations, which has an impact on the federal funds rate. The Fed buys and sells government securities on the open market in open operations. The Fed purchases government bonds to enhance the money supply. This increases the overall money supply by providing

When interest rates are expected to climb dramatically, this is the most important sell signal in the bond market. Because the value of bonds on the open market is primarily determined by the coupon rates of other bonds, an increase in interest rates will likely lead current bonds – your bonds – to lose value.