Bonds

The overall rate of return earned by a bond after it has made all interest payments and repaid the original principle is known as yield to maturity (YTM). The internal rate of return (IRR) on a bond if held to maturity is known as YTM. The yield to maturity is calculated using a sophisticated formula […]

The internal rate of return required for the present value of all future cash flows of the bond (face value and coupon payments) to equal the current bond price is known as the yield to maturity (YTM). All coupon payments are reinvested at a yield equal to the YTM, and the bond is held to

What else did the government’s bond-sale effort achieve? Raised funds for the war effort. It sparked patriotism and served as a fantastic rallying point for the populace. What was the primary motivation behind the sale of Liberty Bonds? During World War I, the United States government developed and marketed Liberty Bonds to help fund the

When the Fed buys bonds on the open market, it expands the economy’s money supply by exchanging bonds for cash to the general public. When the Fed sells bonds, it reduces the money supply by taking cash out of the economy and replacing it with bonds. As a result, OMO has a direct influence on

Bonds are purchased and sold in massive amounts in the United States and around the world. Some bonds are easier to purchase and sell than others, but that doesn’t stop investors from doing so almost every second of every trading day. Treasury and savings bonds can be purchased and sold using a brokerage account or

Without stocks and bonds, much of the world’s business activity would be impossible. Stocks and bonds are certificates that are offered in order to raise funds for the start-up or expansion of a business. Stocks and bonds are also referred to as securities, and those who purchase them are referred to as investors. What is

A rally is a period in which the prices of stocks, bonds, or similar indexes rise steadily. A rally is characterized by rapid or significant upward movement over a short period of time. This type of price action is called as a bull market rally or a bear market rally, depending on whether it occurs

A Liberty Bond is a debt obligation issued jointly by the United States Treasury and the Federal Reserve. It was a war bond, sometimes known as a Liberty Loan, issued in four payments in 1917-18 to fund the United States’ participation in World War I and the Allied war effort in Europe. What is the

Going short on bonds means an investor or trader believes bond prices will decrease and wants to profit from that adverse attitude – for example, if interest rates are predicted to rise. Bond derivatives, such as futures and options, are one way to short the bond market or hedge an existing long position against a

With the release of The Massive Short, the big financial catastrophe finally gets its star turn on the big screen. The film, which is based on Michael Lewis’s New York Times bestseller of the same name, chronicles the story of six contrarian traders who foresaw the housing crisis before almost anybody else. Their intelligence allowed