The Money Farm Team

Interest rate risk is a concern for bond funds, and it can be significant, especially in a low-interest rate environment. Interest rates have nowhere to go but up when they are at record lows. When interest rates rise, the bond fund’s net asset value can fall dramatically. You can reduce this risk by investing in […]

Because all interest payments on zero coupon bonds are compounded and paid at maturity, they are more sensitive to interest rate changes than bonds that pay interest semiannually. The higher the volatility, the longer the bond’s maturity. Are interest rates a factor in zero coupon bonds? Except for zero-coupon bonds, most bonds pay monthly interest

A risk-free asset is one with a guaranteed future return and almost little chance of loss. Because the US government backs them with its “full confidence and credit,” debt obligations issued by the US Treasury (bonds, notes, and especially Treasury bills) are considered risk-free. The return on risk-free assets is very close to the present

Treasury securities (“Treasuries”) are issued by the federal government and are considered to be among the safest investments available since they are guaranteed by the US government’s “full faith and credit.” This means that no matter what happens—recession, inflation, or war—the US government will protect its bondholders. Treasuries are a liquid asset as well. Every

Economic development, competing currencies, and hedging options are all reasons that drive demand for Treasuries. Remember that anything that increases demand for long-term Treasury bonds tends to lower interest rates (higher demand = higher price = lower yield or interest rates), while anything that decreases demand for bonds tends to raise interest rates (lower demand

Treasury securities (“Treasuries”) are issued by the federal government and are considered to be among the safest investments available since they are guaranteed by the US government’s “full faith and credit.” This means that no matter what happens—recession, inflation, or war—the US government will protect its bondholders. Treasuries are a liquid asset as well. Every

You must make the best approximation as to what those future profits will be in order to compute the present value. To make matters worse, these earnings do not have a set duration. It’s possible that they’ll go on for decades. You’re applying an ever-changing discount rate to an ever-changing predicted return flow. Because estimating

The most prevalent investing products are stocks, bonds, and mutual funds. All of these products have larger risks and possible rewards than savings accounts. Stocks have consistently delivered the highest average rate of return over several decades. However, when you buy stock, there are no assurances of success, making stock one of the most dangerous

A: Surety bonds guarantee that contracts and other commercial transactions will be executed according to agreed-upon terms. Consumers and government bodies are protected by surety bonds from fraud and misconduct. When a principal violates the terms of a bond, the aggrieved party can file a claim against the bond to recoup losses. What does a

Relationships that are strong and healthy are crucial throughout your life. Your mental, emotional, and even physical well-being is influenced by your social ties with family members, friends, neighbors, coworkers, and others. Dr. Valerie Maholmes, an NIH psychologist and relationship expert, says, “We can’t underestimate the importance of a relationship in helping to enhance well-being.”