Bonds FAQs

  1. Do long-term bonds have a greater interest rate risk than short-term bonds?

  2. What's the difference between bills, notes and bonds?

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

  4. What is the difference between a debenture and a bond?

  5. What is a basis point (BPS)?

  6. Why do interest rates tend to have an inverse relationship with bond prices?

  7. What determines the price of a bond in the open market?

  8. What does a negative bond yield mean?

  9. Are money market funds considered cash?

  10. Are money market accounts considered checking or savings?

  11. Are money market dividends qualified?

  12. How safe are money market accounts?

  13. What is the difference between a collateralized mortgage obligation (CMO) and a collateralized bond obligation (CBO)?

  14. Do hedge funds invest in bonds?

  15. What is the relationship between the current yield and risk?

  16. Why would a corporation issue convertible bonds?

  17. How does the bond market react to changes in the Federal Funds Rate?

  18. What is the relationship between current yield and yield to maturity (YTM)?

  19. How do I use the holding period return yield to evaluate my bond portfolio?

  20. What is a 'busted' convertible bond?

  21. How can I use the holding period return yield to determine whether or not I should sell my bond?

  22. Should investors focus more on the current yield or face value of a bond?

  23. What bond indexes follow the supply and demand for junk bonds?

  24. Why are the term structure of interest rates indicative of future interest rates?

  25. Who or what is backing municipal bonds?

  26. What are the differences between debt and equity markets?

  27. What is the difference between the equity market and the fixed income market?

  28. How stable are municipal bonds?

  29. How do the returns on municipal bonds compare to those of other bonds?

  30. What do cities do with the funds generated from municipal bonds?

  31. What does it signify if the term structure of an interest rate's curve is positive?

  32. How is the standard error used in trading?

  33. Where can I find information about corporate bond issues?

  34. What are some examples of high yield bonds?

  35. For what types of accounts are demand deposits available?

  36. To what extent are utility stocks affected by changes in interest rates?

  37. Why are high yield bonds typically lower rated bonds?

  38. What is the difference between term structure and a yield curve?

  39. Why is term structure theory of importance to economists?

  40. Why has the market for high yield bonds grown so much?

  41. How safe are high yield bonds?

  42. What does a climbing interest rate risk signify about the economy?

  43. Why would a company use a form of long-term debt to capitalize operations versus issuing equity?

  44. Where can I find year-to-date (YTD) returns for benchmarks?

  45. How do I evaluate a debt security?

  46. What is the effective interest method of amortization?

  47. Under what circumstances would someone enter into a repurchase agreement?

  48. How does the effective interest method treat the interest on a bond?

  49. What happens to the price of a premium bond as it approaches maturity?

  50. What are the key factors that will cause a bond to trade as a premium bond?

  51. Which economic factors impact treasury yields?

  52. What is the importance of calculating tax equivalent bond yield?

  53. What are the highest-yielding investment grade bonds?

  54. What is the difference between market risk premium and equity risk premium?

  55. What securities does the primary market deal with?

  56. What is meant by off-the-run treasuries?

  57. How do I calculate a modified duration using Matlab?

  58. How can bond yield influence the stock market?

  59. Will the price of a premium bond be higher or lower than its par value?

  60. How is bond yield affected by monetary policy?

  61. How are junk bonds rated differently by Standard & Poor's and Moody's?

  62. What are the advantages of foreign portfolio investment?

  63. How can I tell if a security is considered investment grade?

  64. For what financial instruments is a modified duration relevant?

  65. How do I calculate the holding period return yield on a zero-coupon bond?

  66. What are some examples of financial markets and their roles?

  67. How are municipal bonds taxed?

  68. What is the difference between a bank guarantee and a bond?

  69. Over what time period should I be looking at the forward rate?

  70. In a repurchase agreement (repo) why is a longer tenor more risky?

  71. Who facilitates buying and selling on the primary market?

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

  73. What is the difference between the Daily Treasury Long-Term Rates and the Daily Treasury Yield Curve Rates?

  74. How can smart beta be used in trading bonds?

  75. When should a company consider issuing a corporate bond vs. issuing stock?

  76. How is a corporate bond taxed?

  77. Why is Manchester United (MANU) carrying so much debt?

  78. What can cause a security to go from investment grade to "junk" grade?

  79. How do I use the principles of convexity to compare bonds?

  80. How can I calculate convexity in Excel?

  81. What is the correlation between a coupon rate and the convexity of a given bond?

  82. How can I calculate the carrying value of a bond?

  83. How does duration impact bond funds?

  84. How does the Fisher effect illustrate returns on bonds?

  85. How can I create a yield curve in Excel?

  86. What are the different formations of yield curves?

  87. How does a bond's coupon rate affect its price?

  88. In what ways can a sinking fund affect bond returns?

  89. What is a barbell fixed-income strategy?

  90. How can I use a bond's duration to predict its return?

  91. When does a primary market become a secondary market?

  92. How can I calculate a bond's coupon rate in Excel?

  93. How do interest rates affect a bond's coupon rate?

  94. What are the differences between a bond's yield to maturity and the spot rate?

  95. What is the risk return tradeoff for bonds?

  96. What is the difference between a modified duration and a Macaulay duration?

  97. How do I calculate a bond's modified duration using Excel?

  98. Which financial instruments have par values?

  99. How is the Macaulay duration related to fixed income markets?

  100. What is the difference between Macaulay duration and modified duration?

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